President Joe Biden's administration has already suspended funding for UNRWA, despite saying its work in war-ravaged Gaza was invaluable.
A $1.2 trillion funding package hammered out by lawmakers early Thursday says that US government money -- either leftover funds from the current year or in the next fiscal year -- "may not be used for a contribution, grant or other payment" for UNRWA.
The move by US lawmakers will only exacerbate the "famine-like conditions" experienced by Palestinians in Gaza, as Israel's siege of the territory has pushed nearly all of the 2.4 million Gazans to the brink of starvation.
This comes as Israel continues its efforts to smear the UN refugee agency, often seen as the last lifeline for Gazans, while diverting attention from its growing list of war crimes in the Gaza Strip.
Israel had launched an expanded, concerted campaign aimed at destroying UNRWA," Philippe Lazzarini, the head of the UN agency said.
"It is a long-term political goal because it is believed that if the aid agency is abolished, the status of the Palestinian refugees will be resolved once and for all -- and with it, the right of return. There is a much larger political goal behind this," he said.
Right of return
Over 760,000 Palestinians fled as they were driven forcely from their homes in what is referred to by Palestinians as the "Nakba" (catastrophe in Arabic).
Around 180,000 fled to Gaza, with the rest scattered across the West Bank and neighbouring Arab countries, specifically Jordan, Lebanon and Syria.
In 1949, the United Nations set up the UNRWA, to provide them and their descendants, who also have refugee status, with basic services, including health and education.
Israel has been systematically targeting UNRWA for years, persisting in undermining its mission, calling for ending the definition of Palestinian refugees, and has persistently rejected their "right of return", which the UN clearly backed in resolution 194.
More than two-thirds of the 2.4 million people living in Gaza are registered refugees.
US lawmakers released the plan to keep the government running ahead of a deadline of midnight on Friday, when three-quarters of the government will run out of funds if a deal is not reached.
Both the Republican-led House and Democratic-led Senate are expected to approve the plan, which would then be sent to Biden for his signature, despite misgivings by a number of lawmakers about some provisions.
No evidence
Israel has accused 12 of UNRWA's roughly 13,000 Gaza employees of participating in the Hamas offensive into southern Israel on 7 October and accused the agency of being a front for Hamas.
However, Israel failed to provide any evidence for such claims, prompting countries that had previously halted funding to resume their contributions to agency.
UNRWA said it is now subject to an independent UN investigation.
The European Union's top humanitarian aid official said on 15 March, he had seen no evidence from Israel to back its accusations against staff from the U.N. Palestinian refugee agency (UNRWA), which should continue playing a "critical" role in Gaza.
Janez Lenarcic, the head of humanitarian aid and crisis management at the European Commission, said that neither he nor - according to his knowledge - anybody else at the EU executive, or any other UNRWA donor had been presented with evidence by Israel.
"Even if those allegations, at the end of the day, prove to be true, that doesn't mean that UNRWA is the perpetrator," he told journalists.
This week, Israel barred UNRWA's chief, Philippe Lazzarini, from visiting Gaza, saying he did not go through proper procedures.
The State Department said it provided $121 million to UNRWA in the current fiscal year and that its suspension only affected about $300,000.
Expecting opposition from Republicans to resuming funding, the Biden administration has been reaching out to other countries to make contributions.
Saudi Arabia, which Secretary of State Antony Blinken visited this week, announced Wednesday that it was donating $40 million to UNRWA.
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