Jerusalem (CNN) -- Israel plans to ease its blockade of Gaza, Prime Minister Benjamin Netanyahu said Sunday following an Israeli Security Cabinet meeting, a step commended by major powers and brushed off by a Palestinian organization and government. 
 
 "The government position is that Israel should open all the crossings of Gaza in accordance with 2005 AMA agreement, and end the closure regime," Palestinian government spokesman Ghassan Khatib told CNN. 
 
 Tony Blair, envoy for the Middle East Quartet -- the U.S., Russia, the European Union and the United Nations -- said in a statement Israel would publish a list of weapons and war items not permitted into Gaza rather than those permitted, and allow full access of civilian goods. 
 
 The Security Cabinet said last week it planned to revamp its policy, paving the way for a vote Sunday. 
 
 "This comes as a partial manner due to international pressure but does not meet the minimal needs of the people in Gaza to live in dignity," said Hanan Ashrawi, member of the Palestine Liberation Organization executive committee. 
 
 Ashraw said the steps were an improvement but the blockade should be completely lifted and the Israeli occupation ended. 
 
 Israel's announcement comes three weeks after ships in Israel's naval blockade sparred with a flotilla of aid ships heading to Gaza. Nine Turkish activists were killed in the incident, which drew international criticism. 
 
 Israel's military stopped the flotilla and boarded the ships. Israel says its troops were attacked with knives, metal poles and other objects on one of the boats, and the flotilla passengers say they were fired upon without provocation. 
 
 The latest step is among six the Israeli government will begin implementing as soon as possible, including expanding operations at the existing operating land crossings and streamlining the permitting process of international aid groups the government recognizes, the prime minister said. 
 
 The naval blockade of Gaza remains in place, and military officials will continue to inspect goods on Gaza-bound ships, Netanyahu said. "Israel will continue to facilitate the expeditious inspection and delivery of goods bound for Gaza through the port of Ashdod." 
 
 Blair, who met with Netanyahu on Sunday, said the move should radically change the exchange of goods in the area. 
 
 "Plainly there are still issues to be addressed and the test of course will be not what is said, but what is done," Blair said in a statement. "But I welcome strongly this statement of policy and the Office of the Quartet Representative looks forward to working closely with the Government of Israel and other partners on its implementation." 
 
 The White House also commended the policy, saying in a statement it will improve conditions for Palestinians in Gaza while preventing the entry of weapons. 
 
 "We will work with Israel, the Palestinian Authority, the Quartet and other international partners to ensure these arrangements are implemented as quickly and effectively as possible and to explore additional ways to improve the situation in Gaza, including greater freedom of movement and commerce between Gaza and the West Bank," the statement said. "There is more to be done, and the president looks forward to discussing this new policy, and additional steps, with Prime Minister Netanyahu during his visit to Washington on July 6." 
 
 "Over these coming months we therefore need: to improve life in Gaza; continue the growth in the West Bank and the PA development of its institutions for statehood; and ensure that the indirect talks, led by Senator Mitchell, turn into full direct negotiations," Blair said. 
 
 The White House said, "there is no need for unnecessary confrontations, and we call on all parties to act responsibly in meeting the needs of the people of Gaza." 
 
 Israel, the United States and Blair all called for the release of Gilad Shalit, an Israeli soldier who has been held in Gaza for nearly four years. "We will redouble our efforts to secure his freedom," Blair said. 
 
 Separately, Germany criticized Israeli officials for denying Dirk Niebel, German minister of economic cooperation and development, entry into Gaza. 
 
 "The goal of the federal government remains the complete end of the blockade Gaza Strip," German Foreign Minister Guido Westerwelle said in a Sunday statement. "That is not only Germany's stance but also that of our partners in the European Union." 
 
 Yigal Palmor, spokesman for the Israeli foreign ministry, said Neibel was not allowed to enter Gaza because "Hamas uses visits of this kind for purposes of manipulation and misrepresentation of international legitimacy and normal relations with the international community." 
 
 Israel's policy of denying high-ranking diplomats access to Gaza -- in place since last year's Israeli incursion into Gaza -- has angered European governments which finance various programs in Gaza. Israel made an exception earlier this year, when it allowed United Nations Secretary-General Ban Ki-moon and Baroness Catherine Ashton, EU foreign policy chief, to visit Gaza. 
 
 CNN's Guy Azriel, Kareem Khadder, and Ben Brumfield contributed to this report. ||||| Israel's Prime Minister Benjamin Netanyahu (R) listens to an Air Force Major General during the weekly cabinet meeting in Jerusalem June 20, 2010. 
 
 JERUSALEM | 
 
 JERUSALEM (Reuters) - Israel said Sunday it was easing a land blockade on the Gaza Strip to allow in all goods except for arms and materials used to make them. 
 
 The softening of a policy criticized as collective punishment of Gaza's 1.5 million Palestinians to weaken their hardline Islamist leaders follows an Israeli raid on a blockade-running flotilla in which nine activists died. 
 
 The United States quickly welcomed the shift and said President Barack Obama would hold a delayed meeting with Israeli Prime Minister Benjamin Netanyahu in Washington on July 6. 
 
 Israel's old rules banned everything it chose not to let in. 
 
 Netanyahu said Israel would "as quickly as possible" publish a list of banned goods and all items not on it would be allowed in to the Palestinian territory run by the Hamas Islamist group. 
 
 "Israel seeks to keep out of Gaza weapons and material that Hamas uses to prepare and carry out terror and rocket attacks against Israel and its civilians," he said. "All other goods will be allowed into Gaza." 
 
 Israel has been under pressure to ease its blockade since the May 31 raid on ships bringing aid to Gaza. Israel says the nine Turkish activists killed were waiting to attack Israeli commandos but the outcome sparked an international outcry. 
 
 Israel's allies, including the United States and the European Union, said the blockade was a failing policy that had become counter-productive and difficult to defend. 
 
 Welcoming the change, the White House announced the new date for the U.S. and Israeli leaders to meet. Netanyahu was supposed to see Obama at the White House on June 1 after of a trip to Canada but canceled to return home after the flotilla raid. 
 
 "Implementation of the policy announced by the government of Israel today should improve life for the people of Gaza and we will continue to support that effort," the White House said. 
 
 Hamas said the Israeli announcement fell short of international demands to lift the blockade completely. 
 
 "Hamas rejects this decision. This is an attempt to sap international anger over the blockade on the Gaza Strip," Hamas official Ismail Radwan told Reuters by phone from Gaza. 
 
 Under the new rules Israel will let in building materials for housing projects approved by the Palestinian Authority (PA) and supervised by international organizations. Hamas does not recognize the legitimacy of the PA, based in the West Bank. 
 
 The projects included deal with schools, health facilities, water treatment and sanitation, the Israeli statement said. 
 
 But it said it would keep the right to ban "dual-use" construction materials that it says could be used by Hamas to manufacture weapons and to rebuild its military facilities. 
 
 BLAIR 
 
 Netanyahu announced the plan together with international Middle East envoy Tony Blair, who had been lobbying Israel to limit its open-ended embargo to a list of specified items. 
 
 Blair represents the Quartet of international powers seeking Middle East peace -- the United States, European Union, United Nations and Russia. 
 
 He said the best response from Hamas would be to stop attacking Israel and free Gilad Shalit, an Israeli soldier captured and held for four years. 
 
 Blair said the increased flow of goods into Gaza would allow for the "expansion of economic activity" there. 
 
 The United Nations says the blockade has not only deprived the poorest in Gaza of basic needs but suffocated the enclave's chances of trading. It insists building materials be allowed in. 
 
 The coastal strip, where 1 million Palestinians depend on aid from the United Nations and other international relief agencies, suffered severe damage in a three-week Israeli offensive launched in December 2008. 
 
 There has been practically no reconstruction since thousands of homes and factories were wrecked. 
 
 Israel said it would expand operations at border crossings controlled by its army to allow more goods into Gaza. It said it would consider opening more border crossings and allow more people in and out of Gaza, if calm persisted along the border. 
 
 Israel's 2008/09 winter offensive was triggered by incessant rocket fire into Israel from Gaza, which caused few casualties but struck fear into southern Israeli communities. 
 
 Israel says it will maintain a sea blockade on Gaza to prevent ships ferrying longer-range rockets to Hamas from its main backer, Iran. 
 
 Hamas, which refuses to recognize Israel, seized control of Gaza in 2007 after routing forces loyal to the Fatah movement of Palestinian President Mahmoud Abbas, who heads the PA. 
 
 Hamas is opposed to the current indirect peace talks with Israel, mediated by the Obama administration. 
 
 (Additional reporting by Douglas Hamilton in Jerusalem, Ali Sawafta in Ramallah and Matt Spetalnick in Washington, Editing by Douglas Hamilton and Richard Meares)
– Israel will allow goods to enter Gaza by land but will continue to ban the importation of weapons and will maintain its naval blockade on the area, CNN reports. Rather than listing what's allowed in, Israel will permit everything other than " weapons and material that Hamas uses to prepare and carry out terror ," PM Benjamin Netanyahu tells Reuters. The move comes 3 weeks after Israeli troops stormed aid ships and 10 pro-Palestinian activists died. The US and Middle East envoy Tony Blair sounded cautiously optimistic about the policy change. "There is more to be done, and the president looks forward to discussing this new policy, and additional steps, with Prime Minister Netanyahu during his visit to Washington on July 6," the White House said in a statement. Said Blair: "Plainly there are still issues to be addressed and the test of course will be not what is said, but what is done."