Hamas launched a program on Tuesday to rebuild 1,000 homes in the Gaza Strip destroyed during an Israeli offensive two years ago, a project that could boost the Islamist group's standing in the enclave it controls.

Hamas, shunned by the West for refusing to renounce violence, declined to disclose the project's cost or the source of its funding. International donations towards reconstruction in Gaza have been held up by Hamas' split with the Palestinian Authority controlling the West Bank.

Dozens of families are still living in tents and depend on aid from relief agencies after their homes were destroyed in the December 2008-January 2009 Gaza war, which Israel launched to curb cross-border rocket attacks.

"We are announcing today the launching of the first project to rebuild what had been destroyed by the occupation in all of the Gaza Strip," Ismail Haniyeh, prime minister of Hamas' Gaza-based government, said at a cornerstone-laying ceremony.

Youssef al-Mansi, the Hamas-appointed minister of public works, said construction would begin at several sites within a week to 10 days.

Majed Goma, whose family of eight has lived in the only two rooms of his home that were not damaged in the Gaza war, said he hoped the project marked the beginning "a new era -- the era of rebuilding".

Reconstruction has been limited by Israel's blockade of the Gaza Strip, a measure also largely in effect at Egypt's border crossing with the territory.

Some cement has been smuggled into the Gaza Strip from Egypt through a network of tunnels, and Israel has been allowing international aid agencies to import building material through its frontier with the enclave.

International donors have pledged $4.8 billion for reconstruction, but the money has been held back because Hamas and Palestinian President Mahmoud Abbas' Fatah movement have failed to form a unity government to handle the donations.

Asked about the source of money for the new project, Mansi said "there are no donor countries" and that the Hamas-led government would finance all the work.

A US diplomatic cable released by WikiLeaks quoted Egypt's intelligence chief Omar Suleiman as saying Iran was giving Hamas $25 million a month but Egypt was preventing funds from entering Gaza. Iran says its support for Hamas is diplomatic only.