The government has announced its determination to spend more on projects to encourage co-existence between Israelis and Palestinians.

The commitment follows questions from shadow defence spokesman Michael Dugher, MP for Barnsley East, highlighting the small proportion of the aid budget spent on boosting co-operation between Israeli and Palestinian civil society.

Mr Burt told parliament this week that the Department for International Development spends £70,000 on co-existence projects and joint business initiatives out of an overall budget for conflict prevention and economic development of £73 million. Answers given to Lord Janner of Braunstone in February showed a similar proportion of European aid (around one per cent) was being spent on such projects.

Mr Burt told the Commons on Tuesday: "Sometimes it is difficult to separate these things out, category by category. For example, the £30 million that goes into the promotion of Palestinian economic development feeds into work on prosperity and co-existence issues. The Foreign Office is open to more project applications coming in for exactly such projects." The minister said he would contact Jerusalem and Tel Aviv to see what could be done to encourage such activities.

Jennifer Gerber, director of Labour Friends of Israel said: "European governments spend a huge amount of money in the Palestinian territories and it is vital that this is spent intelligently on projects that increase co-operation between Israelis and Palestinians.

"We are pleased the government is now looking into the issue of the small proportion of aid spent on joint Israeli-Palestinian civil society and business initiatives as achieving a two-state solution and a lasting peace requires us to do as much as possible now to tackle mistrust and to foster co-existence on the ground."

The Labour defence team - Mr Dugher and former Scottish Secretary Jim Murphy - has recently returned from a fact-finding mission to Israel and the West Bank where they met senior Israeli politicians and British staff working to train members of the Palestinan security forces. Both men are prominent in Labour Friends of Israel.