JERUSALEM - Hamas police seized thousands of blankets and food packages meant for the needy in Gaza amid an apparent dispute with the UN over who was receiving the aide, the UN and Hamas officials said Wednesday.

Christopher Gunness, a spokesman for the United Nations Relief and Works Agency, said Hamas policemen broke into an aid warehouse in Gaza City on Tuesday evening and confiscated 3,500 blankets and more than 400 packages of food.

"They were armed, they seized this, they took it by force," Gunness said, calling the seizure "absolutely unacceptable."

He said police confiscated aid meant for 500 families after UN officials refused to voluntarily hand it over to the Hamas-run Ministry of Social Affairs. Similar UN aid packages had already been distributed to 70,000 residents over the past two weeks.

However, it was the Hamas government that demanded an "immediate apology" from the UN Wednesday for what spokesman Taher Nunu said was "spreading false news."

Ahmad Kurd, the Hamas Minister of Social Affairs, did not deny the aid had been seized, but said the UN had been handing out relief to groups tied to Hamas' opponents.

"UNRWA did not do what it said it would do, and began distributing its aid to groups that tie their activities to political activism," Kurd said Wednesday.

UN officials said they distributed aid directly to residents according to a list compiled by community leaders.

The UN agency provides food, education and health care to more than half of Gaza's 1.4 million residents, but tensions between the UNRWA and Hamas could harm international donations.

"Does anyone really think that the Americans, who are our single largest donor, or the Europeans, who are our largest multination donor, would give us aid in the generous way they do if they thought that aid would go to terrorists?" Gunness said.

The European Commission, which contributed US$626 million to the Palestinians in 2008, indicated that a repeat seizure could affect donations.

"We are very concerned, but this is an isolated incident, we hope," said Alix de Mauny, an EC spokeswoman. "We will react accordingly if this develops beyond an isolated incident."

A donors conference is scheduled to be held in Cairo later this month.

Israeli officials routinely accuse Hamas of taking aid intended for needy Gazans.

"We know Hamas is stealing humanitarian aid and donations from international organizations," Israeli military spokesman Peter Lerner said.

But Gunness said it was the first time Hamas had seized UNRWA supplies since it took control of the territory in 2007, and that he hoped the seizure would not prevent the agency from working in Gaza.

Hamas officials said the UN was welcome to continue its operations.

Hamas is under pressure to provide aid to Gazans, who face more hardship than ever since Israel's devastating three-week military offensive that ended Jan. 18.

The operation, aimed at halting rocket fire from the territory, killed hundreds of civilians and left thousands destitute after their homes were damaged or destroyed.

Benjamin Netanyahu, the front-runner in Israel's upcoming election, said Wednesday that the offensive ended too soon and that Hamas -- an "extremist fanatic regime" -- must be ousted.

"There is no choice but to uproot the Iranian-backed regime in Gaza," Netanyahu said. But he stopped short of saying he would attack Gaza if he is elected Feb. 10.

The militant group's ability to provide aid to impoverished residents is crucial to maintaining support for its rule in the territory.

Kurd said Hamas had already distributed $50 million in emergency relief to residents and promised additional cash payments to hardship cases.

The rival, western-backed Palestinian administration in the West Bank said it will donate $600 million to help Gaza residents rebuild their homes.

In an effort to bypass Hamas, Palestinian Prime Minister Salam Fayyad said the money from western donors would be channelled through commercial banks directly to recipients.

Fayyad and President Mahmoud Abbas lost control of Gaza to Hamas in 2007 but is eager to regain a role there.