STOCKHOLM - Donor nations pledged 940 million dollars in aid on Thursday to help Lebanon rebuild smashed infrastructure, shelter the homeless and remove unexploded ordnance after a blistering 34-day Israeli bombing offensive.

"An amount exceeding 900 million dollars was pledged at the Stockholm conference," Swedish Foreign Minister Jan Eliasson told delegates, later updating the sum to 940 million dollars (734.7 million euros).

Including previous contributions, the amount pledged so far for Lebanon's acute needs totals 1.2 billion dollars, Eliasson said, later telling reporters that the United States, the European Union and Gulf states had been the most generous donors. "This conference has met its objectives by a wide margin," he said, noting that Swedish organisers had originally hoped to raise 500 million dollars.

Lebanese Prime Minister Fuad Siniora expressed his gratitude but recalled that the cost of the damage wrought by Israel's offensive would run to billions of dollars.

"We discovered today that Lebanon is not alone," he told reporters.

"I believe we have a long way to go to get the economy back on the growth track," he said, adding: "We will be up to the challenge."

"The direct damage from this last invasion to our infrastructure and to our public and private property is now running into the billions of dollars," Siniora told representatives from the US and European, Middle Eastern and Asian countries.

Losses in economic output, jobs, and the long-term direct and indirect costs to the economy including lost revenues in tourism, agriculture and industry are expected to be "billions more", he added.

Siniora had told the representatives of almost 50 countries and a dozen organisations that any aid effort would be undermined unless Israel lifted its "humiliating" sea and air blockade on Lebanon.

Eliasson echoed the plea, saying the blockade "constitutes a major impediment to the early recovery process."

UN Deputy Secretary General Mark Malloch Brown called for an immediate end to the blockade and a political solution to the underlying causes of the conflict.

"Otherwise aid risks substituting for the real oxygen of recovery: private investment, which will stay away if the risk of conflict remains high," he said.

Siniora urged the United Nations Security Council to take a leading role in mediating peace in the region, and called on Israel to recognize Palestinian statehood and withdraw from all Arab lands it occupies.

"If we are to have real peace and stability in the Middle East, the root causes of this war must be addressed," he said.

The money raised on Thursday -- the first donors' conference since the conflict broke out in July --, was to be used to provide shelter for those left homeless by the Israeli bombing, access to medical care, repair infrastructure including water and electricity supplies, and remove unexploded ordnance.

Lebanon's prime minister vowed that the money would be spent transparently and rejected the idea that aid to southern Lebanon, where the Shiite militia Hezbollah is based, would end up in Hezbollah pockets.

"This idea that it will be siphoned in one way or another to Hezbollah is entirely, completely, a fallacy and is not true," he said.

"The assistance will be channelled through government agencies and this will go to the needy people directly. It will not have any intermediary in any way," he said.

According to the UN High Commissioner for Refugees, some 300,000 people are still displaced, or seven percent of the Lebanese population. About one million people had to flee their homes because of the conflict.

The money raised Thursday will be used over the next few months to help the country get back on its feet. Lebanon's long-term reconstruction needs are to be addressed at a conference to be held later this year.

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