VIENNA Austria is suspending its aid to Palestinians, totalling around 19 million euros ($20 million) for a handful of projects, in response to Islamist group Hamas's deadly attack on Israel, Foreign Minister Alexander Schallenberg said on Monday.

Neutral Austria's ruling conservatives have adopted one of the most pro-Israel stances in the European Union in recent years. The Israeli flag has been hoisted above the chancellor's office and the Foreign Ministry after the shock Hamas assault launched from the Gaza Strip on Saturday.

"The extent of the terror is so horrific ... that we cannot go back to business as usual. We will therefore put all payments from Austrian development cooperation on ice for the time being," Schallenberg told ORF radio in comments confirmed by a spokeswoman, adding the estimate of funds and projects affected.

Schallenberg did not distinguish between Gaza, a Palestinian enclave ruled by Hamas, and the much larger West Bank, run by the Western-backed Palestinian Authority led by President Mahmoud Abbas, whose Fatah movement is a rival to Hamas.

On Sunday, neighbouring Germany debated whether it should stop aid to Palestinians following the Hamas attack, with Development Minister Svenja Schulze of the ruling Social Democrats saying the government had always been careful to check that the money was only used for peaceful ends.

Schallenberg said Austria would assess its projects before deciding how to proceed in consultation with partners within and outside the EU.

Hamas militants killed 700 Israelis and abducted dozens in the deadliest such incursion since the Yom Kippur war 50 years ago, prompting Israel to retaliate with its heaviest ever bombardment of Gaza, killing more than 400 people.

($1 = 0.9491 euros)

(Reporting by Francois Murphy; editing by Mark Heinrich)