(JERUSALEM) - British humanitarian agencies on Thursday said the situation in the Gaza Strip was the worst in 40 years and urged the European Union to hold talks with Hamas, which runs the impoverished territory.

They also called for an end of Israel's punishing blockade of Gaza, an isolated enclave that is one of the most densely populated places on earth.

"The situation for 1.5 million Palestinians in the Gaza Strip is worse now than at any time since the beginning of the Israeli military occupation in 1967," the eight non-governmental organisations said in a joint report.

They called for negotiations with Hamas, the Islamists who seized control of Gaza in June and who are considered a terrorist group by the European Union, Israel and the United States.

"The international policy of isolating Hamas has not reaped any benefits," the report said.

"We urge the UK government and the EU to abandon the failing policy of non-engagement and begin political dialogue with all Palestinian parties" said the agencies, which include Oxfam and Amnesty International.

The report claimed that the blockade of Gaza, aimed at forcing militants to halt rocket attacks, failed to deliver security to Palestinians and Israelis alike.

"We ask the UK government and the EU to issue a strong condemnation of the continuing blockade of Gaza and the Israeli government's use of collective punishment and associated violations of international humanitarian law," the report said.

It painted a grim picture of the situation in the crowded territory, saying 80 percent of the people are dependent on food aid and 40 percent unemployed.

Because spare parts cannot be imported, hospitals cannot keep lifesaving equipment working, while the virtual collapse of key infrastructure is causing up to 50 million tons of sewage to be dumped into the Mediterranean Sea every day, the agencies said.

"Unless the blockade ends now, it will be impossible to pull Gaza back from the brink of this disaster and any hopes of peace in the region will be dashed," said Geoffrey Dennis, chief executive of CARE International UK.

But Peter Lerner, the spokesman for the Israeli coordination office with the Palestinian territories, lay the blame for the situation in Gaza on Hamas and said Israel is meeting the basic humanitarian needs of the Gaza Strip.

"The responsibility for what is happening in Gaza since the Israeli withdrawal and the dismantling of settlements (in 2005) rests largely on Hamas, to which all complaints should be addressed," he said.

The situation in Gaza has been further aggravated by a sharp escalation of violence since February 27, when Israel mounted a deadly blitz on the territory in response to rocket attacks.

Israel's latest offensive in Gaza has killed more than 125 people in a week, including more than 20 children. On the Israeli side, two soldiers and a civilian were killed.

The agencies called for an end to both the "indiscriminate" rocket attacks from Gaza and the "disproportionate" response by Israel.

They also urged the international community to facilitate a dialogue aimed at Palestinian reconciliation.

Hamas has ruled Gaza since June when it ousted the rival forces of moderate Palestinian president Mahmud Abbas, whose authority is now limited to the occupied West Bank.

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