(Adds Granger and Engel, background on U.S. law, AIPAC statement; in paragraphs 3-4, 8-9 and 14)
By Patricia Zengerle
WASHINGTON, June 2 (Reuters) - Senior U.S. lawmakers said on Monday Washington should suspend aid to the new unity government between Palestinian President Mahmoud Abbas' Palestine Liberation Organization and Hamas until it is sure of the Islamist group's commitment to pursuing peace with Israel.
Abbas swore in the government on Monday in a reconciliation deal with Hamas that led Israel to freeze U.S.-brokered peace talks.
"Funding for the Palestinians is off-the-table until it is clear that the unity government is committed to peace and security," said Republican U.S. Representative Kay Granger of Texas, chairwoman of the House of Representatives State and Foreign Operations subcommittee.
"Hamas, not just members of the new government, must acknowledge Israel's right to exist, renounce violence, and adhere to previous international agreements," she said in a statement.
The U.S. Congress, led by Granger's subcommittee and its counterpart in the U.S. Senate, authorizes $500 million in annual aid Washington sends to the cash-strapped Palestinian Authority.
Palestinian leader Abbas, whose Palestinian Authority is dependent on foreign aid, appeared to be banking on Western acceptance - over Israeli objections - of a 16-member cabinet of what he described as politically unaffiliated technocrats.
Setting a policy in line with U.S. and European Union demands, the Western-backed leader said his administration would continue to honor agreements and principles at the foundation of a peace process with Israel.
But U.S. lawmakers, many of whom are strongly pro-Israel, expressed skepticism. Language in U.S. appropriations law bans Washington from sending funds to any government in which Hamas is seen to have "undue influence."
"The United States is under no obligation to give a dime to the PA as it reconciles with a known terrorist group," said New York Representative Eliot Engel, the top Democrat on the House Foreign Affairs Committee.
Virginia U.S. Representative Eric Cantor, the No. 2 Republican in the House, said the Obama administration and Congress should suspend aid while they assess the new government.
"The laws of the United States prohibit assistance to terrorist organizations," Cantor said in a statement.
New York Representative Nita Lowey, the top Democrat on the House State and Foreign Operations subcommittee, said she still believed the United States should continue to promote negotiations toward creating a two-state solution.
Lowey said in a statement she was "deeply disappointed" with the announcement of a Palestinian government including "the terrorist organization Hamas."
The influential pro-Israel lobbying group AIPAC issued a statement on Monday urging Congress to review assistance to the Palestinian Authority "to ensure that the law is completely followed and implemented." (Editing by Grant McCool and Mohammad Zargham)