BERLIN The German government said on Sunday it was reviewing its hundreds of millions of euros of aid for Palestinians following the biggest attack on Israel in years by Palestinian Islamist group Hamas.

Development Minister Svenja Schulze said the government had always been careful to check that the money was only used for peaceful ends.

"But these attacks on Israel mark a terrible fracture," she said. "We will now review our entire engagement for the Palestinian territories."

Germany would discuss with Israel how development projects in the region could best be served, and coordinate with international partners, said the minister for German Chancellor Olaf Scholz's centre-left government.

Some German lawmakers, from the opposition conservatives in particular, called for an end to the aid.

"All of Europe, all 27 states, must now say: we need a new start and we will no longer finance terrorists," said Armin Laschet, chancellor candidate for the conservatives at the last federal election, calling for an end to EU cooperation with Palestinian President Mahmoud Abbas, who is based in the West Bank.

Gregor Gysi, a prominent member of the opposition Left party argued against such a move, saying Hamas, and not all Palestinians, were responsible for the attack.

(Reporting by Markus Wacket; Writing by Sarah Marsh; Editing by Ros Russell)