THE EU Parliament's Committee on Budgetary Control approved the change in March and this week it received the final approval.
PEGASE, which is described as a mechanism "to channel EU and international assistance as a contribution to the building of the Palestinian State," is the PA's main source of funding.
The new legislation determines that classes and instruction program funded using EU funds must reflect shared values such as peace, liberty, tolerance and non-discrimination in the education system.
The Israeli research institute IMPACT-SE at the Hebrew University of Jerusalem, which studies and analyzes official text books around the world, aided the European Union in formulating the legislation.
The institute's chief executive officer Marcus Sheff pointed out that "it's very strange that the PEGASE foundation has been transferring some 3 billion euros to the Palestinian Authority over the past 10 years - with large parts of this money going to the Palestinian education system - while all of those years the EU made no real attempt to ensure that the Palestinian students receive an education that is in line with European values of peace and tolerance."
Sheff went on to say that last year's reform of Palestinian education, which was done in cooperation with European diplomats, "was meant to give Palestinian students better tools for a better future. But in reality, our reports on the new education curriculum and the textbooks for grades 1-11, clearly showed it is more extreme than ever."
"The Palestinian children receive intentional and systematic encouragement to sacrifice themselves and their lives," he added. "The European Parliament has now decided in a clear and unequivocal manner that it is time to say enough."