Gleneagles, Scotland- The G8 has pledged a $3bn (£1.72bn) aid package for the Palestinian Authority, BBC reported today.

Speaking at the Gleneagles summit, UK Prime Minister Tony Blair said the funds were to help Israel and the Palestinians co-exist in peace.

He described the package as a &#34contrast with the politics of terror&#34, referring to Thursday”s bomb attacks on London.

&#34Yesterday evening the G8 agreed a substantial package of help for the Palestinian authority amounting to up to $3bn in the years to come, so that two states – Israel and Palestine – two peoples and two religions can live side by side in peace,&#34 Blair said.

The G8 offer follows a pledge of $350m by the United States, some of which is to be spent on housing and infrastructure in the Gaza Strip. The aid announcement comes ahead of Israel”s withdrawal from Gaza, due to begin in August.

Israel is planning to pull out all 8,000 Jewish settlers and the troops that protect them. It will maintain control of Gaza”s borders, coastline and airspace.