(CNN) -- The foreign affairs chief for the European Union said Saturday the alliance is committed to Palestinian statehood and to improving the situation in Gaza.

Catherine Ashton met in Ramallah, West Bank, Saturday with Palestinian Authority Prime Minister Salam Fayyad.

Ashton confirmed the EU's strong commitment to both the Palestinian Authority and to a "democratic and viable Palestinian state." Statehood is "critical" for any lasting peace in the region, she said.

Ashton announced the allocation of 40 million euros ($52 million) in direct financial support from the EU to the Palestinian Authority. She said that the EU will consider further financial support in a few months.

She called on Israel to fully implement its revised policy toward Gaza, announced in the wake of public outcry over a deadly incident involving pro-Palestinian activists last month. She said the new policy -- which would allow more goods into Gaza -- was necessary to improve the lives of people in Gaza.

Ashton also announced the launch of a joint recovery program which aims to support private sector development in Gaza territory in order to revitalize the economy. Ashton called on Palestinians to overcome their differences in order to build their own state and said she would like to see the Palestinian Authority return to Gaza.

Ashton travels to Gaza Sunday, where she will meet with officials from the United Nations Relief and Works Agency. Ashton is also expected to tour several areas that were hit hard during Israel's conflict with Hamas in late 2008 and early 2009.

One of those stops will be at a refugee camp school that human rights activists say was hit by white phosphorus shells, fired by Israeli forces, during the conflict. Israel denies that white phosphorus was used.

Ashton is in the Middle East for a three-day visit. She will leave the region on Monday. Her trip corresponds with a visit by U.S. envoy George Mitchell, who is pushing for Israeli-Palestinian direct peace talks.

Mitchell met Saturday with Palestinian Authority President Mahmoud Abbas, chief Palestinian negotiator Saeb Erakat and other Palestinian officials. The meeting comes a day after Mitchell talked with Israeli Prime Minister Benjamin Netanyahu.

CNN's Kareem Khadder contributed to this report.