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The EU has put all of its development funding to the Palestinian territories under review in response to Hamas’s attack on Israel, following similar decisions by Germany and Austria.

“The scale of terror and brutality against Israel and its people is a turning point. There can be no business as usual,” Olivér Várhelyi, the European commissioner for the EU neighbourhood, wrote on the social media platform X, formerly known as Twitter.

“All payments [are] immediately suspended. All projects put under review. All new budget proposals, including for 2023 [are] postponed until further notice,” said Várhelyi. “Incitement to hatred, violence and glorification of terror have poisoned the minds of too many,” he added. “We need action and we need it now.”

The EU’s decision affects €691mn in aid and comes after the German government said earlier on Monday that it would halt bilateral assistance worth €125mn due this year, pending a “comprehensive” examination into how such aid was being used.

Austrian aid worth €19mn has also been stopped.

The EU’s 27 foreign ministers are to convene on Tuesday for an emergency meeting on the bloc’s reaction to the attack. They will gather in Muscat, Oman, where they were due to attend an EU-Gulf Cooperation Council.

The EU had pledged a total of €1.18bn in financial support from 2021 to 2024 in a joint programme for the West Bank and Gaza, which is controlled by Hamas.

The European Commission denied that any money was going to Hamas. “The EU is not funding Hamas or their terrorist activities directly or indirectly,” it said, adding that it has had a “no contact policy” with the group since 2007.

The projects funded by the bloc were delivered by development partners such as nongovernment organisations.

“The aggression by Hamas has to stop and the hostages be released,” the commission said, adding that Israel had the right to self-defence.

In the surprise attacks on Saturday, more than 700 Israelis — mostly civilians — were killed and about 100 people taken hostage in the country’s deadliest ever single day of conflict.

Some EU capitals are reluctant to completely freeze bilateral and EU funding, arguing that it would punish civilians rather than the perpetrators of the attack. Italy said on Monday that it would continue its humanitarian aid to the Palestinian territories.

German development minister Svenja Schulze said on Sunday evening that the attacks marked a “terrible turning point” and that Germany was seeking to co-ordinate with allies on how best to respond. Schulze, from Chancellor Olaf Scholz’s Social Democratic party, said the German government had to review “its entire engagement for the Palestinian territories”.

Israel has promised an overwhelming military retaliation, focused on the Gaza Strip, the narrow coastal enclave home to about 2mn Palestinians, living in cramped and often squalid conditions, from where the attacks were plotted and launched.

On Monday, the Israeli military said it had secured the border regions around Gaza, including the several gaps in the heavily fortified perimeter fence that the attackers had made to swarm into southern Israel and begin their rampage. Israel said it had bombed more than 1,000 targets in Gaza overnight.

Germany said it was confident its existing aid commitments were primarily used for “long-term development co-operation”, citing sanitation and training projects as examples.

Berlin provides no funding to the Palestinian Authority, it said. It stressed that the block on payments was temporary.

Lawmakers from the opposition Christian Democratic Union said Monday’s suspension should be considered only a “first step”, and demanded a more robust response.

In an interview with Zeit Online, the CDU’s foreign policy spokesperson Roderich Kiesewetter called for a cross-departmental “general review”, involving the foreign ministry, development ministry, interior ministry and ministry of economics of how all German aid was being spent in Palestine, and to which organisations it was being directed.

He singled out organisations in Germany in receipt of government funds that he said had links to terror organisations including Hamas and Hizbollah, the Lebanese group.