The UK will resume funding UNRWA, the UN’s agency for Palestinian refugees, the foreign secretary has announced.

David Lammy told MPs he had received reassurances about its neutrality in the wake of a review of alleged links between its staff and terror groups.

The UK was among 16 Western countries to halt donations in January, after Israel alleged 12 UNRWA staff were involved in the October 2023 attacks by Hamas.

An internal UN investigation into allegations related to that attack is ongoing.

But a separate UN review, published in April, found Israel had not provided evidence for its claims hundreds of UNRWA staff were members of terror groups.

The announcement brings the UK into line with other countries that have resumed funding since then, leaving the United States, UNRWA’s single biggest donor, as the only country not to have restarted donations.

Speaking in the Commons, Mr Lammy said “no other agency” was able to deliver aid at the scale required to alleviate the “desperate” humanitarian situation in Gaza.

He added UNRWA was feeding more than half the territory’s two-million population and would be “vital for future reconstruction”.

He said he had been “appalled” by Israel’s allegations, but the claims had been taken “seriously” by the United Nations.

He had been reassured the agency “is ensuring they meet the highest standards of neutrality” in the wake of the April review, he added.

This included “strengthening its procedures, including on vetting,” Mr Lammy said.

He told MPs a resumption of the UK’s £21m annual funding would include money put towards “management reforms” recommended by the UN review.

The Foreign Office said £6m would be given to UNRWA’s flash appeal for Gaza, and £15m to the agency’s budget to provide services in the Israeli-occupied Palestinian territories and wider region.

UNRWA spokeswoman Juliette Touma told the BBC the agency welcomed the announcement, which came at a “critical time as humanitarian needs in Gaza continue to deepen”.

She added that the agency had reassured the UK it was implementing recommendations from the April report, “especially with regards to continuing to follow the principle of neutrality in our programmes”.

The review, by former French Foreign Minister Catherine Colonna, found Israel had “yet to provide supporting evidence” for its claims that a “significant number of UNRWA employees are members of terrorist organizations”.

Israel has said more than 2,135 employees of the agency – out of a total of 13,000 in Gaza – are members of Hamas or Palestinian Islamic Jihad, proscribed as terrorist organisations by Israel, the UK, US and other countries.

However, the review concluded the agency must do more to improve its neutrality, staff vetting and transparency.

Israeli authorities suggest the report ignores the severity of the problem, and claim UNRWA has systematic links with Hamas.

Israel initially alleged that 12 UNRWA staff took part in the Hamas attacks on southern Israel, which saw 1,200 people killed and about 250 taken hostage.

More than 38,000 people have been killed in Gaza since then, according to the territory’s Hamas-run health ministry, after Israel launched a military campaign in Gaza in response to the attacks.

UNRWA sacked the 10 of the 12 employees who were still alive when the allegations emerged and the UN’s Office of Internal Oversight launched an investigation into the claims.

In April, the body said eight employees remained under investigation, with inquiries suspended in four of the cases because of insufficient evidence.

It added it had also begun investigations into an additional seven staff members, and six of those cases were ongoing.

During his Commons statement, Mr Lammy also rejected calls from some Labour MPs to impose a ban on all UK weapons sales to Israel.

Alongside Green MPs and pro-Gaza independents, some 14 Labour backbenchers want to table an amendment calling for an arms embargo during a debate next week on the King’s Speech, the government’s law-making plans.

The foreign secretary said it would “not be right to have a blanket ban” as Israel was surrounded by enemies in “one of the toughest neighbourhoods in the world”.

He added that arms export licences would be kept under review “in the normal way” by reviewing assessments of Israel’s compliance by government lawyers.

A “comprehensive review” was under way and he would update MPs once it was complete, Mr Lammy said.

However, he did not commit to publishing internal legal advice – something he called on the previous government to do when Labour was in opposition.