A U.N. agency aiding Palestinian refugees said Wednesday that Saudi Arabia is contributing $70 million for new housing units in the Gaza Strip.

Israel has authorized construction of the 1,200 new homes and 18 badly needed schools in Gaza, in what would be one of the largest housing projects in the seaside territory in years.

Israel, which controls the cargo crossings into Gaza, has largely banned the entry of construction materials into the coastal strip since Hamas militants seized control in 2007. Israel withdrew from Gaza in 2005.

UNRWA spokesman Chris Gunness said Wednesday that the test of Israel's decision would be whether it allows thousands of trucks to ferry building material into Gaza's border town of Rafah, where the houses are to be built.

The Israeli military said it had no objections to Saudi funding for the project, as long as international groups were overseeing the construction.

Japan is also funding the project.