The motive behind such a move would be to side-line Hamas and other resistance groups which already offer welfare support to Palestinians.
Israeli Prime Minister Ariel Sharon and his UK counterpart Tony Blair discussed yesterday how to bring about "the complete delegitimisation of Hamas" and similar groups, a senior Israeli official said late last night.
Until then, the two leaders were finding it difficult to agree on key issues. Sharon failed to convince the UK prime minister to cut ties with Yasser Arafat, whom the Israeli premier described as “the major obstacle to peace in the Middle East”.
And Blair made little headway when he urged Sharon to dismantle the illegal Israeli settlements in the West Bank, release Palestinian prisoners, and halt the construction of a 210-mile security wall in the West Bank.
The official told Agence France Presse that the plan would involve Europe taking a role in Middle East peacemaking efforts by providing the Palestinian public with some of the social and welfare services currently offered by Hamas.
"What would influence the Palestinian public's support for Hamas is British and European action to offer an alternative to those services," he said.
"There is a need to invest in projects that would be implemented immediately and would show the Palestinian public an immediate improvement in their situation."
Hamas's popularity has risen dramatically among the Palestinian public since the outbreak of the Intifada, or Palestinian uprising, in September 2000, with the movement's political arm running an active charity network.
Thanks to its provision of everything from medical care to food, the organisation counts tens of thousands of supporters.
Debris litters the scene of the
Tel Aviv stabbing
Meanwhile, Israel radio has reported that a Palestinian man stabbed to death one person and wounded two others in an attack in the Israeli city of Tel Aviv on Tuesday morning.
The 23-year-old assailant was shot and arrested after the attack on a seaside promenade, the first by a Palestinian in an Israeli city since resistance groups announced a three-month truce on 29 June.
The attacker, who was from East Jerusalem, stabbed a security guard who prevented him from entering the open-air Tarabin restaurant at around 1:30 am (2230 GMT) in Israel's main commercial city, police said.
He then stabbed two passers-by as he fled along a promenade by the Mediterranean Sea. Another security guard eventually shot him about 500 metres from the restaurant.
"We've got one civilian who was killed," police commander Yossi Sedbon told reporters on the scene. "The Palestinian was shot in his legs and is now under medical care."
However, Sedbon did not say whether the dead person was male or female. He also did not give the victim's nationality.