EU gives extra 85 million euros to Palestinians

* Move follows Israeli cut-off in tax revenues

* EU stresses need to maintain essential services

BRUSSELS, May 6 (Reuters) - The European Union said on Friday it would provide an extra 85 million euros (${esc.dollar}124 million) to the Palestinian Authority to help pay salaries of essential workers and to support vulnerable families.

The move was decided on after Israel on Sunday blocked the transfer of ${esc.dollar}105 million in customs duties and other levies it collects on behalf of the Palestinian Authority, following a deal to reunite the two rival wings of the Palestinian independence movement. [ID:nLDE74001M]

A European Commission statement said the EU funds were being advanced under an accelerated procedure at the request of Palestinian Prime Minister Salam Fayyad to meet urgent financial needs.

The statement said 45 million euros would go towards salaries and pensions of vital workers, mainly doctors, nurses and teachers. A further 40 million would go to social allowances to vulnerable Palestinian families.

"It is important that access to essential public services remains uninterrupted and the right to social services is respected," EU foreign policy chief Catherine Ashton said.

The EU funds are in addition to 100 million euros already approved for 2011.

The money will be channelled through an EU mechanism which has provided 762 million euros in support to the Palestinian Authority since 2008, in addition to 276 million from EU states.

Palestinians see reconciliation between the secular Fatah and Islamist Hamas as crucial for their drive for an independent state in territories Israel captured in the 1967 Arab-Israeli War. Israel has condemned the unity pact as a "tremendous blow to peace". [ID:nLDE7432HB]

(Reporting by David Brunnstrom)