Qatar and Saudi Arabia have condemned an Israeli parliamentary bill that seeks to label UNRWA, the main provider of aid for Palestinians in Gaza, a "terrorist group", joining a growing number of nations opposed to the proposal.

The bill, which passed a preliminary vote in parliament last week, is the product of increasingly tense relations between Israel and the United Nations agency for Palestinian refugees.

Israel has accused the agency of Hamas links, claiming that hundreds of its employees are members of resistance groups, including some who allegedly participated in the Oct. 7 attacks on southern Israel. UNRWA denies the charges, saying it adheres to UN standards of neutrality.

Those allegations led to a freeze in funding by many donors to the agency at a time when Gaza has been buckling under a humanitarian crisis triggered by the war. UNRWA says it took swift action against those accused and an independent review of the agency’s neutrality found that Israel did not previously raise concerns about the workers and did not provide evidence backing its claims.

The bill moving through parliament seeks to brand the agency a “terror group,” claiming that the employees’ alleged involvement in the Hamas assault shows that “it is a terror organisation that is no different from the Hamas terror organisation.” The bill also seeks to cut diplomatic ties between Israel and the agency.

The bill passed the initial vote 42-6 and must go through committees and three other votes before becoming law.

Dismantling UNRWA

Juliette Touma, UNRWA’s director of communications, said the bill was part of Israel’s ongoing “systematic campaign” to dismantle the UN agency that is putting the lives of its staff at risk. She said it was too early to predict how the bill might affect the agency.

UNRWA has operations in Israeli-occupied East Jerusalem, West Bank and Gaza and it must go through Israeli crossings in order to deliver aid and supplies into Gaza.

In response to the bill, Qatar’s Foreign Ministry said the attempt to brand UNRWA a terrorist organisation is “an extension of the systematic campaign aimed at dismantling the agency at a time when the need for its humanitarian services is dire due to the ongoing war in the Gaza Strip.”

Saudi Arabia also condemned the move, saying UNRWA employees “are doing their duty to alleviate the severity of the humanitarian catastrophe that the Palestinian people are going through.”

“The kingdom stresses that Israel, as an occupying state, must abide by international law and international humanitarian law and stop obstructing the work of international organisations,” the Saudi Foreign Ministry said.

The European Union, which along with its member states is the biggest donor to UNRWA, also condemned the move on Friday. It pointed to the “crucial and irreplaceable” role of UNRWA in addressing the humanitarian crisis in Gaza. Belgium, an EU member, put out its own condemnations.

UNRWA, employs thousands of workers and provides vital aid and services to millions of people across the Middle East.

In Gaza, it has been the main supplier of food, water and shelter to civilians during Israel's Gaza war.