The EU Commissioner for Development, Louis Michel, announced the move on Wednesday. It came after days of fighting between rival Fatah and Hamas factions that have left over 80 people dead.

Michel, who expressed concern over the "growing humanitarian tragedy in Gaza," also appealed to both sides.

"The Palestinians have already suffered far too much. I strongly urge the warring parties to put away their guns and work together for the good of their people," he said.

Laws breached

He also urged Fatah and Hamas to abide by international conventions.

"The warring parties must respect the principles of international humanitarian law and do everything possible to facilitate safe access by relief agencies to the civilian population," Michel said.

Hardline Islamist Hamas fighters on Wednesday advanced their campaign to defeat the rival Fatah movement in the Gaza Strip amid warnings that the deadly showdown could lead to an all-out Palestinian civil war.

The US-based Human Rights Watch has accused both sides of committing war crimes during their battles, which have turned hospitals into battlegrounds.

Some senior Palestinians have blamed the escalation of violence in the area on the EU's direct aid embargo imposed on the Hamas government after it came to power last January. They say it has undermined the entire Palestinian Authority.

Lack of security

The EU suspended all 16 of its relief projects in the territory funded by the Commission's Humanitarian Aid department (ECHO) due to the lack of security.

Michel said, "I fervently hope that the projects can resume very soon. This is a time when people desperately need protection and support."

The UN has also temporarily called off its relief operations in the area following the death of two UN Relief and Works Agency employees caught in the crossfire.

Last year, the Commission provided 84 million euros ($112 million) for humanitarian operations in the Palestinian Territories and 60 million euros have been earmarked for this year so far.