The commitment, made to UN relief and works agency for Palestine refugees (UNRWA) for the period 2014-2016, will assist in providing much-needed education, health, relief and social services in the region.
On announcing the contribution, Ashton said, "The EU's continuing support to UNRWA is a key element in our strategy to promote stability in the Middle East and facilitate the parties' quest for peace.
"It also contributes to securing access to basic social services, reducing poverty and improving refugees' living standards.
"For over 42 years, the EU has remained committed to supporting UNRWA," added the British official.
"The EU's continuing support to UNRWA is a key element in our strategy to promote stability in the Middle East and facilitate the parties' quest for peace"-Catherine Ashton
Füle continued, "UNRWA is implementing its humanitarian, developmental and protection programmes against a backdrop of extraordinary operational challenges, deriving from the conflict in Syria which has had humanitarian implications in Jordan and Lebanon, the Gaza blockade and the Israeli occupation of the West Bank, including East Jerusalem.
"In recognition of the excellent work carried out by UNRWA and despite the EU budgetary distress, we have increased our contribution to UNRWA core budget," said the commissioner.
The EU has been providing support to Palestine refugees through UNRWA since 1971, helping to improve the lives of millions. Between 2007 and 2013 the EU provided more than €958m to the agency, and last year the bloc contributed 43 per cent of UNRWA's budget.
UNRWA commissioner general Pierre Krähenbühl responded to the announcement, saying, "The EU remains a steadfast partner for Palestine refugees amid the uncertainty of the Middle East right now, and this three year agreement offers much needed predictability.
"Allow me to add that this contribution is important because there is an increasing recognition among European audiences that international assistance to Palestine refugees is being accompanied by the promotion of rights, not just to high standards of human development, but also to a just and lasting resolution of their plight," he continued.
"The EU remains a steadfast partner for Palestine refugees amid the uncertainty of the Middle East right now"-Pierre Krähenbühl
The news comes just a day after the Palestinian central bureau of statistics, Food and agriculture organisation, World food programme and UNWRA released a joint press statement warning of high food insecurity in Palestine.
According to the statement a third of households - or 1.6 million people - were food insecure in 2013, which the agencies attribute to "an ongoing decrease in funding for critical UN programmes such as food, agriculture and cash for work, focused on assisting those in greatest need".
"Reductions in these vital humanitarian programmes would have a considerable impact at a time when the needs persist.
"However, food insecurity in Palestine can only be sustainably improved by addressing the root causes of the crisis, such as the ongoing blockade on Gaza and access restrictions in the West Bank," it concluded.