Prime Minister Stephen Harper announced $66 million in new economic aid to the Palestinians during a visit to the West Bank city of Ramallah on Monday.
As part of his first official visit to the Middle East, Harper met with Palestinian Authority head Mahmoud Abbas.
The prime minister said the financial aid will help advance the peace process between Israel and Palestine, as well as promote security in the region and deliver humanitarian aid.
"Canada looks forward to a bright future for all Palestinians, one in which security and prosperity are enjoyed in a viable and democratic Palestinian state," Harper said in a statement released Monday. "The support we are providing today will advance those goals by furthering the peace process, generating jobs and economic growth through private sector partnerships, and helping to further advance security and justice sector reforms."
Since the signing of the Oslo peace accords in 1993 and the creation of the Palestinian Authority, Canada has provided more than $650 million in development assistance for the West Bank and Gaza.
Harper has also been one of Israel's strongest supporters.
Canada was one of only nine countries to vote at the United Nations against the Palestinian bid for statehood recognition. On the issue of Iran, the Canadian government has stressed it stands firmly on the Israeli side, separate from key allies, including the U.S. and Britain.
However, during a joint news conference with Abbas, the prime minister insisted that his stance was neither Israeli nor Palestinian, but rather Canadian.
He said he supported a two-state solution, but added that he would not be drawn into criticizing Israel during his first official visit to the Middle East.
Harper is scheduled to address the Israeli parliament on Monday night, where he is expected to speak of Canada and Israel's relationship.
He will be the first Canadian prime minister to speak to the Israeli parliament.