Brussels (Reuters) -- EU executive said that it has earmarked 1.4 million euros ($1.71 million) in aid to Palestinians whose homes have been destroyed by Israeli forces, on Wednesday.

The EU has condemned the destruction and will send its funds to victims of house demolitions in Rafah, in the south of the Gaza Strip, where thousands saw their homes destroyed or damaged during Israeli army incursions in May and June.

Israel, which often accuses the EU of being biased towards the Palestinians, says it needs to destroy buildings which militants use for smuggling weapons or for gunmen to attack Israeli forces.

"House demolitions are disproportionate acts that contravene international humanitarian law, in particular the Fourth Geneva Convention, and show a reckless disregard for the lives of civilians," said EU Humanitarian Aid Commissioner Poul Nielson.

"The Israeli authorities must take urgent action to alleviate the suffering of the population in the occupied territories," he said in a statement.

The EU has contributed about 148 million euros to the Palestinians since September 2000, when they launched an offensive against Israel.

The European Commission's anti-fraud unit said on Tuesday it had found no evidence that EU aid to the Palestinian Authority had been used to finance illegal activities such as terrorism.