Bil'in, West Bank - A flattened hillside and unused blueprints are all that is left of plans by the West Bank village of Bili'n to build a state school for girls after the U.S. government pulled its money out of the project.

To the chagrin of the impoverished residents of Bili'n, the U.S. Agency for International Development (USAID) has shifted its focus since Hamas won parliamentary elections and took control of the Palestinian government a year ago.

Instead of public infrastructure projects like the school planned for Bili'n, the U.S. government is redirecting its resources to private schools, humanitarian programmes and security projects that have no connection with the Hamas-led government, which controls the public school system.

The new focus is benefiting poor Palestinian farmers in the West Bank village of Fasayel and nine other communities in the Jordan Valley. A three-month-old USAID programme supplies them with seed and fertiliser to grow 13 varieties of vegetables.

"We are trying to meet the needs of the Palestinian people," said USAID mission director Howard Sumka during a tour of Fasayel. He said U.S. aid restrictions reflected "the new political situation here". U.S. policy is designed to deny funds to any programmes that might benefit Hamas, which it considers a terrorist organisation.

Sumka played down the chances of a change in U.S. aid policy any time soon despite last month's formation of a unity government between President Mahmoud Abbas's Fatah faction and Hamas Islamists.

Palestinian analyst Hani al-Masri said the shift in funds away from development projects would hinder the ability of Palestinians to build their own functioning institutions.

"Focusing on relief assistance makes the Palestinians dependent on aid indefinitely," al-Masri said.

Mouin Rabbani, a senior analyst at the International Crisis Group, said America's image in the Palestinian territories "is so bad that if they started handing out gold bars in the streets the impact would probably be minimal."

Under the USAID programme in Fasayel, many of the 1,800 residents receive seeds, small plants and irrigation equipment to grow enough vegetables in their home plots to feed families living in clay-built houses.

"We pick the crop, feed the family and distribute what remains to the neighbours," Um Jihad, a 42-year-old mother of nine, said as she picked vegetables from her tiny field next to a water container displaying the USAID logo.

Um Mohammad Rashaideh, mother of 14, said: "I am grateful to America. This programme helped in changing our lives. We will not forget their favour."

Across the West Bank, Bili'n residents are bitter over the U.S. aid policy change. Bili'n was poised to receive U.S. funds totalling $100,000 to help build a public school for girls.

The village council drew up building plans, cleared part of a hillside for construction, and paved new roads to where the school was going to stand.

But the U.S. funding fell through after Hamas came to power, the school was never build, and the village is struggling to repay its debts and find other willing donors.

"I was so sad," said Said Yousef, headmaster of the village's only school that now crams 270 boys and 180 girls into the same 23 classrooms. The local imam called the combination of boys and girls "dangerous" and an affront to the village's conservative traditions.

Mohammad Abu Rahmeh, a member of the village council, estimated residents spent $40,000 of their own money constructing roads and hiring architects for the school that was never built. "It is a financial disaster," he said. "This is unfair. This is an injustice," adding that they belong neither to Hamas, nor to moderate President Mahmoud Abbas's Fatah faction USAID has a scaled back presence in the village, helping provide food assistance to 73 needy families.

Instead of building public schools like the one in Bili'n, the U.S. government is putting its aid dollars into a network of private schools and youth clubs run by non-governmental groups, including Christian charities.

Other previously approved infrastructure projects, including road building, are now on hold, USAID officials said.

One of the beneficiaries is the St. Joseph's School in the West Bank city of Ramallah, which is receiving USAID funds to renovate its playground.

"This is the first time they are helping us," said Sister Elizabeth Mitry, the principal of St.

Joseph's. "I can't say it's fair or not fair. But we need help. Our students are Palestinians too and they come from needy families."