Washington: US President George W. Bush has signed a law forbidding direct aid to the Hamas-led Palestinian government until it accepts Israel's right to exist and renounces terrorism.

The Palestinian Anti-Terrorism Act allows exceptions for aid to Palestinian President Mahmoud Abbas, elected separately from the Hamas government and viewed as a partner by Washington.

The law, signed by Bush Thursday, also denies US visas to Hamas officials, but allows US aid to help the 'basic human needs' of Palestinians.

The outgoing Republican-led US Congress passed the measure in its final hours Dec 7 by a broad majority.

It was backed by the American Israel Public Affairs Committee, a powerful pro-Israel lobby in Washington. Some Israeli affairs groups say the law is too harsh.

Key provisions demand that Hamas publicly acknowledge Israel's right to exist and adhere to existing agreements with the US, Israel and others, including those on the internationally sponsored 'road ma' for Israeli-Palestinian peace.

The law is designed to promote the development of democratic institutions" in the Palestinian areas, Bush said in a statement.

The US government officially considers Hamas a terrorist group and cut off direct financial aid to the Palestinian government after Hamas took over in March. The Islamic militant group won the first free legislative elections in the West Bank and Gaza in January.