(NICOSIA) - Cyprus is taking legal action against the European Commission over the funding of an energy project in the Turkish-held north of the divided island, Foreign Minister Erato Marcoullis said on Thursday.

Cyprus seeks to block the project -- part of a 259 million euro package for Turkish Cypriots -- at the Court of European Communities.

"This is unacceptable and not commensurate with the spirit and the letter of the aid regulations because it involves the authorities of the pseudo state in tender procedures," Marcoullis told state radio.

"The government decided it should protect its interests by taking it to the European Community court," she added.

Brussels has earmarked the aid package for the Turkish Cypriot community to ease the breakaway state's isolation after a divided Cyprus joined the EU in 2004 when Greek Cypriots rejected a UN reunification plan.

The EU aims to bolster the north's economy by making it easier for Turkish Cypriots to export their goods and encourage enterprise.

The self-declared Turkish Republic of Northern Cyprus is only recognised by Ankara and Nicosia says this aid project is tantamount to upgrading the status of the north.

Cyprus has been divided since 1974 when Turkish troops occupied the northern third of the island in response to an Athens-engineered coup to unite Cyprus with Greece.

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