Israeli government Sunday announced moves to loosen its land blockade against the Gaza Strip, but said it will continue the naval lockdown on the Palestinian enclave.

Israel keeps the right to decide the kind of goods allowed into the coastal area, but has agreed to let more in.

The Israeli authorities will publish a list of banned items, including weapons and "problematic" dual-use materials, to replace the current list of permitted products. All goods that are not on the list will be allowed to enter.

Unnamed sources told Xinhua that following the announcement, the Kerem-Shalom, a border crossing in southeast Gaza for delivery of humanitarian supplies, will expand its capacity by 30 percent on Monday and allow in some 130 truckloads of goods per day.

Israel will let construction materials for civilian projects enter Gaza under international supervision, the statement said, adding the projects must be authorized by the Palestinian National Authority, and receive approval from the Israeli government.

Israel has been hesitant to allow in Gaza-bound supplies of construction materials for fear that the Islamic resistance movement Hamas, which now controls Gaza, would use them to make weapons or build strongholds.

The lack of building materials has been standing in the way of Gaza's reconstruction, since most of its infrastructures and buildings were destroyed during a three-week Israeli offensive started in late 2008. Israeli government alleged that the purpose of the military operation, which claimed some 1,400 Palestinians and 13 Israelis, was to stop rocket attacks from the area.

The change of policy came after the May 31 incident, when Israeli navy commandos boarded a pro-Palestinian international aid flotilla and killed nine activists on one of the ships. The bloodshed brought about a chorus of criticism against Israel from the international community, who has since been pressuring the Jewish state to lift or ease the Gaza siege.

Although Israel promised to let more commodities and people pass the land crossings on its border with Gaza, entry of sea-borne goods is still prohibited.

After the flotilla episode, as international activists are planning more convoy to challenge Israel's blockade policy, Netanyahu and other Israeli senior officials have repeatedly said the Jewish state will continue the naval lockdown.

The statement reiterated Israel's standing that Hamas is a terrorist organization, and called for the international community to press for the release of Gilad Shalit, an Israeli soldier kidnapped by Gaza militants in 2006.

The decision to ease the Gaza siege was hailed by U.S. President Barack Obama.

"The United States welcomes the new policy towards Gaza announced by the Government of Israel, which responds to the calls of many in the international community," White House spokesman Robert Gibbs said Sunday in a statement.

Tony Blair, envoy for the peace Quartet of the UN, the U.S., the European Union and Russia, also "strongly" welcome the decision.

Last week, Netanyahu's office released a brief statement, after two days of debate about the issue at the security cabinet, saying the government agreed to let more civilian goods into Gaza. No detail was made public then.

Local daily Ha'aretz later reported that actually no binding decision was made during the cabinet meeting.

Since Hamas' violent takeover of Gaza in 2007, Israel has imposed a tight blockade upon the enclave, incurring accusations from around the world that the siege has severely worsened the humanitarian situation of some 1.5 million Gaza residents.