Most of the money will be spent on emergency food aid and economic recovery, including job programmes. Kevin Kennedy, the UN humanitarian coordinator, said the crisis was not only an economic collapse but was also tied to an increase in closures and access restrictions imposed on the occupied territories by the Israeli government and to continued conflict, internal political fighting and a breakdown of law and order.

The UN has warned there has been a gradual weakening of the Palestinian Authority. The crisis results from an international boycott imposed in March after the Hamas militant movement won elections and formed a government. Israel has since withheld $60m a month of tax revenues that should go to the Palestinians.

Although some of that money has been spent paying the Palestinian bills of Israeli electricity and water companies, the Israelis have now withheld nearly $600m.

The international community, under the Quartet of the US, the UN, the EU and Russia, has also halted direct funding to the Palestinian government, saying it must recognise Israel, halt violence and accept past peace agreements. The freeze means salaries for 160,000 government workers have largely gone unpaid.

Mr Kennedy said the UN programme was not trying to replace the Palestinian Authority, but he added: "Obviously the longer the current situation continues, with further deterioration, a lack of salaries, people on strike, continued military conflict on both sides, [the] further [the] weakening of the Palestinian Authority and its institutions."

The Quartet has proposed that Israel begin passing on the tax revenues it owes via a system called the temporary international mechanism, which channels money to the office of the Palestinian president, Mahmoud Abbas, a leader of the more moderate Fatah party, and not directly to the rival Hamas government. But so far Israel is withholding the revenues.

In the past year the UN said there had been a 40% increase in the number of barriers and checkpoints across the West Bank. In addition, there have been continued closures of the crossing points for people and goods out of Gaza. Under an agreement negotiated last November, Israel was to open up the main crossing points to relieve the economic crisis. But the crossings have in effect been closed, with Israel citing security concerns.

On top of the economic crisis and the restrictions on movement, in recent weeks talks between Mr Abbas and Hamas to form a coalition government appear to have entirely broken down.

The center also reported that soldiers carried 37 military invasion in several Palestinian areas in the occupied West Bank. During these military offensives, Israeli soldiers took prisoner 117 Palestinians including five children and one woman.

Eight Palestinian civilians were taken prisoner at Israeli checkpoints installed in several areas in the occupied West Bank.

Also, four Palestinian houses and four civilian establishments were demolished in Qalqilia and Bethlehem.

All border crossings in the Gaza Strip remained closed, but were partially opened it certain cases to allow the entry of food, medical supplies and other medications. The movement of the residents remained restricted.

Israeli continued the construction of the illegal Annexation Wall in the West Bank, demolished a house and informed five Palestinian families that their house would be demolished.

Settlers in the occupied West Bank continued their attacks against the Palestinian residents and their property especially in Hebron and Qalqilia.

A Palestinian house in a village, south of Hebron, was fired at by setters driving on bypass road Nr. 60, and one resident was injured by a round of live ammunition in his shoulder. One Palestinian child was also seriously injured in Hebron.

Sa'ed Al Shyukhi, a journalist at Radio Al Huria (Freedom Radio) told IMEMC that soldiers forcefully strip-searched all the employees, then locked them up them in one small room.

He added that all 15 journalists were forced to crouch for 2 hours, " The treated us as like animals" Al Shyukhi said.

Soldiers also confiscated the transmitter of Siraj radio claming it intrrupts Israeli army gunships flying over Hebron area. They also took some other equipments of the station.

According to Shyukhi, troops took Abu Sneinah to unknown location saying that they will release him soon, however, so far, he has not been released.

Israeli army often assult journalist in an attempt to force to leave the area in order not to document the Israeli violations of Human Rights in Palesine, which will make them look bad, Al-Shyukhi added.

The Rafah Border Crossing was closed ton June 25, and was only opened for several short periods enabling some residents to cross back into the Gaza Strip.

At least eight residents died at the Rafah Border Crossing since August after they were stranded there for several weeks due to the Israeli closure and siege imposed on the Gaza Strip after Palestinian fighters captured an Israeli soldier in a raid that targeted a military post near the Gaza borders.

"This report is worrisome for Israel particularly because, for the first time, it mentions the question of the 'right of return' for the Palestinian refugees of 1948," said a senior Israeli official, who was reacting to the US policy report on condition he not be identified.

A Middle East analyst who was involved in the Iraq Study Group discussions but did not participate in drafting the report expressed surprise when the reference was pointed out to him by a reporter.

"It's hard to know whether that language got in there because of carelessness -- I know there were many revisions up to the very last minute -- or whether it was a deliberate attempt to fuse something to the Bush rhetoric which wasn't there before," the analyst said.

The 1993 Oslo peace accords between Israel and the Palestinians calls for a resolution of the issue of Israeli and Palestinian "refugees" as part of a final status agreement that would include the creation of a Palestinian state.

But they do not use the term "right of return", which is a long-standing Palestinian demand -- rejected by Israel -- that Palestinians who fled or were driven out of what was to become the Jewish state in 1948, as well as their descendants, be allowed to return home.

Bush, in a 2002 speech in the White House Rose Garden, became the first US president to formally back the creation of an independent Palestinian state alongside Israel, but he also did not mention a right of Palestinian 'return'.

The bipartisan Iraq Study Group's co-chairman is former secretary of state James Baker, who as the top diplomat for Bush's father in the early 1990s clashed with Israel over its handling of the Palestinian issue.

Among his group's 79 recommendations for a policy shift on Iraq, number 17 concerned five points it said should be included in a negotiated peace between Israel and the Palestinians.

The final point in the list was: "Sustainable negotiations leading to a final peace settlement along the lines of President Bush's two-state solution, which would address the key final status issues of borders, settlements, Jerusalem, the right of return and the end of conflict."

"'Right of return' is not in Oslo I or Oslo II, it's not in the Bush Rose Garden speech, it's not even in UN 181, the original partition resolution -- it's part of the Palestinian discourse," said the US analyst.