The US and the EU announced Friday that all direct financial assistance destined for the Palestinian Authority would be given to nongovernmental organizations instead, following the swearing-in of the Hamas cabinet. The European Union's executive office has cut off direct aid payments to the Hamas-led government because of its refusal to renounce violence and recognize Israel, EU officials said Friday. The decision - condemned by Hamas officials but welcomed by Israel as a sign of a growing international consensus - effectively stops the next installment of some $36.9 million in projects designed to fund hospitals, utilities and education run by the UN, Red Cross and other groups. PA Prime Minister Ismail Haniyeh expressed regret over the "hasty" move. "It is as if they want to punish the Palestinian people for being committed to the culture of democracy and for choosing a government through the ballot boxes," Haniyeh told reporters. "This contradicts the European culture and what they call on the world to do," he said. Aziz Dweik, speaker of the Hamas-dominated Palestinian Legislative Council, called on the EU to reconsider its position and to respect the choice of the Palestinians. US Secretary of State Condoleezza Rice said in a statement Friday, "Because the new Hamas-led Palestinian government has failed to accept the Quartet principles of nonviolence, recognition of Israel and respect for previous agreements between the parties, the United States is suspending assistance to the Palestinian government's cabinet and ministries." The US said it would increase assistance to Palestinians channeled through organizations that were not controlled by the PA government. This is to include $245 million in food, health and humanitarian assistance and another $42m in aid funneled through the UN Relief and Work Agency (UNRWA). "The new Palestinian government must take responsibility for the consequences of its policies. The path back to the road map is clear - acceptance of the three principles. If it accepts the Quartet principles, or a new government comes to power that accepts them, funding can be restored," Rice said in her statement. The US said it would also continue aid meant to promote democracy in the PA. On Friday, the State Department provided a breakdown of the programs that would not longer be funded. These cuts included $45m in direct aid, $135m in infrastructure assistance, $20m in private sector aid. Another $165m that had been destined for ongoing projects would need to be reviewed before authorized, the department said. The US decision to cut assistance was intended to pressure the new Palestinian government while minimizing hardship to civilians in the West Bank and the Gaza Strip. Most programs meant to improve the life of Palestinians will continue, however all those that were channeled through the PA will be closed. More important, the US will not help finance the salaries of the PA's more than 140,000 employees. The US will maintain ties with Palestinian Chairman Mahmoud Abbas. Assistant Secretary of State for Near East Affairs David Welch said Friday that the US continued to support Abbas and that the administration was well aware that the PA was now led by Hamas. "This is fully and totally a Hamas government, from the prime minister through the cabinet on down to the people who work in those ministries. We will have no association with the government," Welch told a news conference. The administration's announcement follows a vote in the House of Representatives' Committee on International Relations Thursday approving a bill meant to set the US approach toward Hamas in law. The bill, which still had to be approved by the full House and be reconciled with a similar Senate bill, would, in addition to eliminating direct assistance to the PA and limit the ability to provide humanitarian aid, lead to the closure of the PLO office in Washington and limit the movement of Palestinian diplomats accredited to the UN. In the recent weeks, the administration worked to moderate the House bill, leading to the addition of a waiver clause that would allow the president to overrule Congress if he decided that assistance to the PA was needed for reasons of national security. Most pro-Israel activists welcomed the new House bill. AIPAC spokesman Josh Block said his organization applauded the new legislation. Groups on the right, including the Orthodox Union, said the current draft of the bill was inadequate. Nathan Diament, head of the Union's Washington office, said, "Now is not the time to relent." On the other side of the political spectrum, the left-wing Brit Tzedek V'shalom group called on members of Congress to oppose the bill, because even its new version "places permanent barriers in front of the peace process." The vast majority of the EU's aid package does not go to the PA government. However, the decision had symbolic value and added to the pressure on the Hamas leadership. The funds were considered vital to keeping the Palestinian economy afloat - and the impact could be even stronger if EU foreign ministers decide at a meeting Monday to also freeze their governments' bilateral aid. Britain and the Netherlands have already taken such a step. EU aid to Palestinians totals more than $600m per year - the bloc is the Palestinians' largest donor - but it has been hanging in the balance since Hamas scored a landslide parliamentary election victory in January. The frozen EU funds amount to half of that annual figure, with the rest coming under the bilateral agreements to be scrutinized at Monday's EU meeting. European Commission spokeswoman Emma Udwin said Friday that "for the time being" no payments were being made to or through the PA. She said the technical move to freeze funds was taken March 29, the day Hamas took power. She called for a new strategy on financing - a call echoed by German Foreign Minister Frank-Walter Steinmeier. "Unfortunately, we can't see any clear signal that would make it possible for us to continue financing in the same way as we did in the past," Steinmeier said. "We have to prepare certain changes in the way of financing." Khaled Abu Toameh contributed to this report.