The quartet of the European Union, Russia, the United Nations and the United States, are the sponsors of the stalled Middle East peace process and the drafters of the roadmap seeking to create a Palestinian state alongside Israel.

"We look forward to living in peace and security, as all countries in the world, and that our people enjoy freedom and independence side-by-side with all our neighbours in this holy place," the text added.

Islamist movement Hamas, whose first government was sworn in last week, has carried out scores of suicide bombings in Israel and is officially committed to armed struggle to end Israeli occupation of Palestinian territories.

Its charter calls for the destruction of the Jewish state and the establishment of a Palestine on land today incorporated in modern Israel.

Yet the copy of the letter referred to the "two-state solution" to the Middle East conflict and said the Hamas-led government was committed to opening peace talks with the international community.

"Israeli procedures in the occupied territories will put an end to all hopes to reach a final settlement based on the two-state solution," it said.

An official in Zahar's office in Gaza City, where the Hamas leader is based, denied that the letter included any sense of recognising the Jewish state or its right to exist.

"Zahar sent a letter to Annan but he did not recognise Israel or make any mention of anything related to Israel's right to exist," he said.

Zahar's letter reiterated previous calls from Hamas for peace talks with the international community, although the radical Islamist faction has refused to renounce violence, explicitly recognise Israel or previous peace agreements.

"Our government is serious about working with the quartet," it said.

"Our government is ready for serious discussions and to work with the United Nations and with the entire international community to strengthen security, sovereignty, peace and independence in our region based on just resolutions.

The EU has been threatening to cut off payments unless Hamas renounces violence and recognises Israel.

See how the EU and US fund the Palestinians

A spokesman for the Hamas government said the decision to suspend aid was a form of "blackmail" that would harm the Palestinian people.

A European Commission spokeswoman, Emma Udwin, told reporters in Brussels that Hamas had not yet met the international community's conditions.

She said the Commission was adopting "a policy of maximum prudence" so as not to pre-judge the European ministers' discussions in Luxembourg on Monday.

Cash-strapped government

Hamas, which took office last week under Prime Minister Ismail Haniya, has already said it would turn to the Islamic world to make up any shortfall in funding from the West.

The Palestinian Authority has received about $600m (500m euros; £340m) a year in aid from the EU since its foundation in 1994, with another $400m coming from the US.

Ms Udwin said some $36.9m in aid from the European Commission was at stake in the immediate future.

The suspension of payments does not affect humanitarian aid sent to non-governmental organisations or to United Nations relief agencies.

The EU's yearly contributions include $262m in donations from individual member states. That money is not affected by Friday's announcement.

The BBC's diplomatic correspondent Jonathan Marcus says the decision by the European Commission represents a clear warning to Hamas of the consequences of its failure to abide by the demands of the international community.

The PA is already facing a financial crisis. Mr Haniya said earlier this week that his government had inherited a finance ministry that had no money left, yet had mounting debts.

Unlawful killing

Andrew Reid, the coroner, had told the jury that the only verdict it could return was one of unlawful killing, but that it had to determine whether Miller was murdered or the victim of manslaughter.

Witnesses had told the inquest that Israeli troops shot Miller at close range even though he wore journalist insignia and waved a white flag.

Last April the Israeli army cleared an officer, identified only as Lieutenant H, of any wrongdoing in Miller's death, drawing an official protest from the British government.

In a statement, the Israeli embassy in London said it regretted Miller's death.

The statement said: "After a very thorough investigation using laboratories in Israel and abroad and after reviewing all the available evidence, it was not possible to reach a reliable conclusion that could provide a basis for proceedings under criminal law."

Award-winner

Miller's film Death in Gaza, completed by colleagues after his killing, shows the 34-year-old approaching an armoured vehicle in the dark before the fatal shots sounded.

Miller had been trying to ask the soldiers if it was safe to leave the area when he was shot in the neck.

In a statement after the verdict, the family said their efforts to investigate Miller's death had "finally been vindicated" by the jury's verdict, after a three-year struggle.

The family, critical of the authorities' efforts in investigating the death, had launched a private investigation, hiring a home office pathologist and an independent military expert to gather evidence.

Death in Gaza won three Emmy awards in 2005. Beneath the Veil, a documentary about life under Afghanistan's Taliban, which Miller made with journalist Shaira Shah, also won an Emmy.

Mr Edge said: "I heard Abdul shouting, it seemed like he was crying in pain - I thought he had been shot. I heard Saira shouting, 'he is injured, he is injured, please don't shoot' and then I heard Abdul shouting 'he is injured'. It was at that point I realised that James had been shot, that he was possibly badly injured, because he was silent."

Mr Edge said he and the two other crew members found Mr Miller alive, but with a bullet wound to his neck. They tried to lift him, but were thwarted by the muddy conditions.

The producer said that after repeated cries for help, the APC moved towards them and a stretcher was tossed down. "It was very muddy, we couldn't carry the stretcher. We dropped it and James fell off - it was terrible. At this stage, one of the soldiers did jump down and lifted the stretcher up on to the APC."

Earlier yesterday, Mr Miller's widow, Sophy, 35, accused the Israeli army of a cover-up and named the soldier who shot her husband as "First Lieutenant Haib", the commander of the Reconnaissance Battalion. He admitted to the shooting at an Israeli army inquest in April last year, which decided the shooting was "reasonable" considering the conditions. He was cleared.

Mr Miller's widow and family accused the Israelis of blaming the Palestinians, destroying incriminating evidence and casting doubt on the professionalism of Mr Miller, a veteran of many conflict zones.

"The thing that is the hardest is that we were given assurances by the Israelis and the [British] Government that it was being fully investigated,'' said his widow, who is bringing up the couple's two children in north Devon.

"Yet it's our family that's done all the work to bring any justice. We had the distinct impression they would like us to leave it. You can understand that in some cases if you didn't have such a strong family, you would.''

A statement by the Israeli army immediately after the shooting said Mr Miller had been caught in crossfire and was probably killed by a Palestinian bullet. An Israeli doctor then wrongly claimed there was a bullet hole in the back, not the front, of his neck. A "field'' investigation failed to gather any witness statements and a day after the killing the scene was bulldozed on the orders of First Lieutenant Haib.

One of Mr Miller's sisters, Anne Waddington, complained that the families had been put under pressure by the Israelis and the British Foreign Office to accept an autopsy on Israeli terms within 24 hours.

She also said radio communications between the APC and its divisional command centre recorded that Mr Miller had been injured "probably from our fire".

"While the Oslo accord agreed for fishing grounds extending to 20 nautical miles west of Gaza, the occupying power currently limits Palestinian fishing boats to 6 nautical miles," the report says.

"A serious problem is that this shallow area close to the shore is where the fish come in to spawn."

Yesterday the UN confirmed that half a million chickens in Gaza must be slaughtered because of exposure to bird flu, damaging the incomes of at least 200,000 poultry workers and their families. The added pressure of avian flu has, it said, "highlighted and enlarged an already critical situation faced by the fishing industry".

Under the 1994 Oslo agreement, the 20 nautical miles should apply to all the Gaza coast bar two closed areas adjoining Israeli and Egyptian waters. Israel confirms that Palestinians are not allowed to fish the full 20 miles, citing security concerns over weapons smuggling and suicide bombers.

But officials insist that they are permitted out to ten nautical miles, and sometimes beyond, and accuse the fishermen of repeatedly trying to breach the mile-wide no-go areas. "In the last few years we have had several attempted suicide bombings against our patrol boats, and several times they have tried to go by sea to populated Israeli areas to try to carry out terror acts," one Israeli naval officer said.

"There are a lot of attempts to smuggle weapons and explosives and the threat is still there. Just three months ago we stopped three attempts like this. These events happen on a day-to-day basis."

The WFP report does not absolve the Palestinians from blame, identifying pollution from a heavy use of chemical pesticides and fertilisers as another cause of the industry's problems. It also says that heavy nets damage the seabed, destroying young fish, crabs and other spawning species.

In Gaza City fishermen deny involvement in weapons smuggling, saying that Israel is using it as a pretext to punish the Palestinians for the five-year intifada, and for voting Hamas into power. Omar Salmi, 46, said that before 1987 - the first outbreak of serious violence - he regularly sailed as far as Port Said, in Egypt, and would spend up to eight days at sea, returning with groaning nets.

Now, he says, Israeli gunboats do not permit them to fish south of Deir al-Balah, halfway along the Gaza coast and, after major suicide bombings in Israel, have even blockaded the harbour. "It depends on the political situation," he said, pointing to crudely patched bullet-sized holes in his hull.

"If things are calm, they will turn a blind eye and we can go even to seven or eight miles," Omar said. "If they aren't, they shoot at the fish to scare them, or shoot at us and arrest us.

"If an Israeli gets killed they will not let us out. As if we are the ones who killed him."

When pressed, his friends concede that in the old days they smuggled from Egypt, finding it more lucrative than fishing. Denials that they ferried weapons are met with scorn by Israeli officials.

"In December 2005 we got into a battle with smugglers. . . we destroyed one boat loaded with explosives and weapons," one naval officer said.

Meanwhile, a Palestinian man was killed overnight by Israeli troops in the West Bank town of Nablus.

Israeli military sources said soldiers exchanged fire with gunmen during an overnight raid to arrest wanted militants in the town, adding that two Israeli soldiers were wounded.

Palestinian witnesses said the dead man was not known to be linked to any militant group, according to the Associated Press news agency.

Gaza City strikes

Two of the Israeli air raids targeted offices of the Al-Aqsa Martyrs' Brigades in Gaza City. The third raid was against a helicopter launch pad.

The Al-Aqsa Martyrs' Brigades are the armed wing of the Fatah movement of Palestinian leader Mahmoud Abbas.

Israel blamed the group for firing several rockets at Israeli towns on Thursday.

One of the rockets hit a factory near the town of Ashkelon, setting it ablaze.

Another landed in the town of Sderot, but causing no injuries, the Israeli army said.