Canada will work with the emergency cabinet formed by moderate Palestinian President Mahmoud Abbas and will aim to restore aid to the government, Foreign Affairs Minister Peter MacKay said Sunday.

MacKay said Ottawa supports Abbas' decision to dissolve the former Palestinian government and to outlaw armed factions of the militant group Hamas.

"I spoke with President Mahmoud Abbas on Thursday, indicating that Canada would support him and continue to support moderate Palestinian efforts. And he has really shown a lot of leadership through a difficult time now," MacKay said Sunday on CTV's Question Period from New Glasgow, N.S.

A series of bloody battles between Fatah and Hamas supporters resulted in Hamas' takeover of the Gaza Strip last week. Abbas then declared a state of emergency, dismantling the three-month-old joint Hamas-Fatah national unity government. He fired Hamas Prime Minister Ismail Haniyeh.

Abbas' new cabinet is led by Salam Fayyad, a respected economist who will continue to serve as finance minister and become foreign minister.

MacKay spoke with Fayyad over the phone Sunday and told him Canada's government will explore in the days and weeks ahead how best to financially help the new Palestinian cabinet, reports the Canadian Press.

"And yes, we're working towards an arrangement that will allow for Canadian aid to flow to this Palestinian government," MacKay told Question Period co-host Craig Oliver.

This aid is contingent, however, on the new government's exclusion of Hamas, which has refused to renounce violence or acknowledge Israel's right to exist. Canada led the international charge in March, 2006, to suspend financial support to the Palestinian Authority after Haniyeh and his Hamas government were sworn in.

"What you're seeing happening is a true tragedy throughout Gaza. And we've seen a lot of violence around the territories," said MacKay.

"What I do know is that the Palestinian people need our support. We are going to work with the moderates. We won't work with Hamas, it's a banned terrorist organization in Canada. But now we've seen a division. And I believe that this may, in fact, allow Canada to play a pivotal role going forward."

MacKay said despite suspending Canadian money from flowing into the former Palestinian government, Canada never stopped sending aid to Palestinian refugees.

"We have continued funding through NGOs (non-governmental organizations), through the United Nations, and through organizations that were delivering aid to Palestinian people. That will continue."

The Canadian Press reports that MacKay also spoke with Israeli Foreign Minister Tzipi Livni and encouraged her to work with the new Palestinian cabinet.