The State Department has yanked Fulbright scholarships from eight Palestinian students from Gaza because Israel will not grant them exit visas, a spokesman said Thursday.

The eight won the prestigious grants for education at U.S. universities and are still eligible, spokesman Tom Casey said.

"The issue was that they could not get visas, so the decision was made to transfer the Fulbrights to the West Bank rather than lose them for this year," Casey said.

Israel has sealed off the small seaside Gaza Strip in an effort to protect bordering Israeli towns and punish the Hamas militants who took over Gaza last June. Israel controls movement in and out of the territory as well as utilities for about 1.3 million Palestinian residents in Gaza.

It was not clear whether replacement candidates were already in line. Casey said the decision to defer the scholarships was made because time was running short for students to make arrangements for the coming school year.

The West Bank is the larger of the two Palestinian territories that would eventually form an independent Palestinian state under a U.S.-backed peace plan.

The decision to withdraw the scholarships was first reported by The New York Times on its Web site Thursday night.