BRUSSELS, Sept. 15 (Xinhua) -- The European Union (EU) has announced an extension to the Temporary International Mechanism (TIM) for Palestinian aid by another three months.

    EU External Relations Commissioner Benita Ferrero-Waldner made the announcement after a meeting of EU foreign ministers on Friday.

    "I am glad that today we decided that this (mechanism) could be extended by another three months because in any case we will have to have a mechanism to provide the (Palestinian) people with more financial means that are necessary," she told a press conference.

    TIM, a scheme designed by the European Commission to bypass the Hamas-led government in the provision of aid to Palestinians, was approved by EU heads of state and government in their June summit.

    The mechanism was launched in July and its three-month validity expires in October.

    The EU is now waiting for the formation of a national unity government in Palestine, which may allow for early engagement.

    The EU foreign ministers on Friday welcomed the announcement by Palestinian Authority President Mahmoud Abbas on an agreement with Hamas to form a government of national unity.

    Ferrero-Waldner said the development is an important step forward although details of the agreement remains to be known.

    She also asked other parties to make full use of the mechanism and reiterated her call for Israel to resume transfers of withheld Palestinian tax and customs revenues.

    The withheld money, about 60 million U.S. dollars per month, is a major cause of the Palestinian government's budget difficulty.

    Finnish Foreign Minister Erkki Tuomioja, who chaired Friday's meeting, indicated that Hamas may retain its position after the formation of the national unity government.

    "In general, we are dealing with the government. We want a Palestinian government which we can deal with," he said.

    The foreign ministers expressed the hope that the political platform of the national unity government will reflect the Middle East Quartet principles and allow for early engagement.

    The Quartet -- the EU, the United States, Russia and the United Nations -- have demanded the Hamas-led government recognize Israel, respect the existing international accords, including the Roadmap, and renounce violence.

    As Hamas refused to yield to its demands, the Quartet had to ask the EU to draw up a Temporary International Mechanism to bypass the Hamas government in the provision of humanitarian aid.

    Hamas is listed as a terrorist organization by the EU, the United States and Israel.

    The formation of a national unity government offers hopes that the EU can have direct contacts with it as long as it makes de facto recognition of Israel, said an EU diplomat on Friday.

    Tuomioja announced that Abbas has been invited to meet EU ministers, probably in New York next week.

    The EU foreign ministers expressed deep concern at the humanitarian situation in the Palestinian territories.

    They called for an immediate end to violence by Palestinian factions as well as to Israeli military activity in the Palestinian territories.

    They also called for the immediate release of the abducted Israeli soldier and for the immediate release of Palestinian ministers and legislators in Israeli custody.

    The ministers renewed their call on the Israeli government to freeze all settlement activity, including natural growth of settlements. They reiterated the EU's position that it will not recognize any changes to the pre-1967 borders other than those agreed by both parties.

    The EU foreign ministers on Friday welcomed the prospect of a meeting between Abbas and Israeli Prime Minister Ehud Olmert in the near future with a view to re-launching negotiations. Enditem