The United States will give Turkish Cypriots $30 million this year to ease the economic isolation in the north of the divided island and reward their reunification efforts, US officials said.

The money comes a day after the European Commission proposed aid and trade measures for the Turkish Cypriots also aimed at promoting the reunification of the Mediterranean island.

The US aid, which will be disbursed within the next few months, is Washington's most concrete move to live up to its pledge not to leave Turkish Cypriots out in the cold after Greek Cypriots rejected a reunification plan.

The Greek Cypriots' "no" in an April referendum defied heavy US, EU and UN pressure and meant Turkish Cypriots remain isolated because only the richer, southern part of the island entered the European Union on May 1.

"We've worked up a package designed to ease the economic isolation and keep the idea of a settlement alive," a senior State Department official said.

Cyprus has been divided into Greek and Turkish sectors since Turkey invaded the north in 1974 after Greek Cypriots mounted a coup aimed at union with Greece.

The United States does not recognise the Turkish Cypriot enclave of 200,000 people as an independent state.

But since Turkish Cypriots voted for the reunification in the referendum, Washington has shown diplomatic support for the north such as holding high-level meetings and easing travel restrictions.

"With this money, Washington is helping meet the Turkish Cypriots' immediate needs," said Bulent Aliriza, a specialist on Cyprus and Turkey at the Centre for Strategic and International Studies, a think tank in Washington.

"It also sends a clear signal that Washington wants to help the economic disparity on the island for their support for reunification," he said.

The European proposals include granting €259 million to the north over several years.

The Bush administration proposed to Congress that the aid come from funds that have already been approved for other projects but have not been used. Congress had until Thursday to reject that proposal.

"The administration's proposal is approved," said John Scofield, spokesman for the US House of Representatives Appropriations Committee.