By Gabriela Baczynska and Alastair Macdonald
BRUSSELS (Reuters) - The European Union, faced with a burgeoning refugee crisis in Greece, launched a new aid program on Wednesday worth an initial 700 million euros that mirrors the kind of disaster relief it offers developing nations.
As European states have closed borders following the arrival of nearly a million migrants by sea from Turkey last year, the Athens government has appealed for help to house and care for tens of thousands still arriving and now stranded in Greece.
The European Commission's proposal will, if approved, switch 300 million euros ($325 million) this year from its 155-billion euro annual budget to the new Emergency Assistance scheme and 200 million next year and in 2018.
Officials stress that the program, run by the department of the EU executive which runs humanitarian relief programs outside the 28-nation bloc, will not divert funds from its 1.1-billion annual budget devoted to helping the world's poorest.
EU officials note that relieving the suffering of refugees closer to their homes is a key part of the Union's strategy to discourage people from making dangerous journeys to Europe.
Greece has hitherto benefited from EU funding and assistance under other programs to bolster its border and security systems and coordinate donations of aid from fellow EU members, though Athens has complained that offers have been inadequate.
The provision of funds that can be spent in conjunction with the United Nations and private charities working in Greece and other EU states is intended to ensure aid reaches people in need fast and in adequate quantities. The funds can be spent on tents and other shelter, food, medical aid and other basic services.
Humanitarian Aid Commissioner Christos Stylianides told a news conference that the funds were needed to cope inside the bloc: "The number of refugees continues to rise, so do their humanitarian needs. All of this is happening inside Europe.
"This assistance will be immediately available."
The budget, EU officials say, is based on an assessment of needs drawn up with member states and U.N. agencies. Greece, its economy blighted by the euro zone debt crisis, has asked for 480 million euros to help cope with 100,000 migrants.
The new program, to be a permanent feature of the EU budget, is intended for use by any EU state that is "overwhelmed" and cannot cope with a wide range of emergencies, including accidents, militant attacks and epidemics. It will need approval by the European Parliament and member states.
Greece, the main gateway to Europe where more than 20,000 people are stranded now, would initially be the main beneficiary of the emergency scheme, which would give swift access to money for "tackling wide-ranging humanitarian crises within the EU".
The money would also be available to other EU countries along the Balkans migration route -- the main track used by refugees and migrants arriving in Europe from Turkey via Greece and then heading north to wealthier EU states, notably Germany.
More than a million people reached Europe last year and some 133,000 arrived on the continent so far in 2016 in what has grown to be a major crisis for the bloc, testing its security systems as well as founding principles of unity and solidarity.
Struggling to put the flow of people under control, countries along the Western Balkans route have tightened their borders, leading to a build-up of people in Greece that is turning into a humanitarian disaster.
(Editing by Alastair Macdonald)