Several US legislators had held up the money, fearing it could reach Hamas, which formed a unity government with Abbas's Fatah party after months of negotiation.
The US considers Hamas a terrorist group, and under US law, taxpayer funds cannot go to such a group. Condoleezza Rice, the secretary of state, submitted a new plan to congress, pared down from $86m, cutting out funds she feared could have reached the "wrong hands".
Meanwhile, the Palestinian Authority's finance minister left on a fundraising trip, aimed at encouraging foreign donors to support the Palestinian administration.
Before leaving on Tuesday, Salam Fayyad, the finance minister, said the Palestinian Authority is operating on only a quarter of the funds needed to finance its activities.
|Salam Fayyad is calling on foreign donors to |
support the Palestinian government [EPA]
"Minimally, I estimate expenditures of the Palestinian Authority at $160m a month at present. What we have is no more than $40m a month," Fayyad told the Reuters news agency.
"Clearly this is not something that can be sustained."
The United Nations, Russia, the US and the European Union, which together make up the Quartet of Middle East mediators, suspended direct aid to the Palestinian Authority after Hamas was elected to form the Palestinian government last year.
Fayyad, who has received praise in the past for reforming Palestinian finances under Yasser Arafat, the late Palestinian leader, will meet Benita Ferrero-Waldner, the EU's external relations commissioner, in Brussels on Wednesday.
EU officials have warned against expecting too much from the meeting, with one EU official reported as saying it was "going to take a while" before the 27-nation bloc would be ready to make a decision on resuming direct aid and that they were "still in the exploratory phase".
Hamas established a unity government with the secular Fatah faction last month, but did not satisfy Quartet demands to recognise Israel, renounce violence and accept past interim peace deals.
The EU, the largest aid donor to the Palestinians, has made resumption of direct aid conditional on a Palestinian administration reflecting those principles. Despite an embargo on direct aid to the administration, EU assistance to the Palestinians increased last year to €700m ($940m), from about €500m.
Of this, €200m went through a temporary aid mechanism set up last year to channel funds to keep essential state services running while bypassing the government.
EU officials have said the temporary mechanism is to remain in place for the time being.