Britain, Italy, the Netherlands and Finland became the latest countries on Saturday to pause funding for the UN refugee agency for Palestinians (UNRWA), following allegations that some of its staff were involved in the Oct 7 Hamas attacks on Israel.

The United States, Australia and Canada had already paused funding to the aid agency, a critical source of support for people in Gaza, after the allegations by Israel. The agency said on Friday it had opened an investigation into several employees and severed ties with those people.

Encouraging more donor suspensions, Israeli Foreign Minister Israel Katz said UNRWA should be replaced once fighting in the enclave dies down and accused UNRWA of ties to Islamist militants in Gaza.

"In Gaza's rebuilding, @UNRWA must be replaced with agencies dedicated to genuine peace and development," he added on X.

Deputy UN spokesperson Farhan Haq, asked about Katz's remarks, said: “We are not responding to rhetoric. UNRWA overall had had a strong record, which we have repeatedly underscored.”

Reuters could not immediately contact UNRWA's communications head for comment. UNRWA has always rejected similar accusations in the past and maintained it is a relief and humanitarian agency.

The Palestinian foreign ministry criticised what it described as an Israeli campaign against UNRWA, and Hamas condemned the termination of employee contracts "based on information derived from the Zionist enemy".

UNRWA was set up to help refugees of the 1948 war at Israel's founding and provides education, health and aid services to Palestinians in Gaza, the West Bank, Jordan, Syria, and Lebanon. It helps about two thirds of Gaza's 2.3 million population and has played a pivotal aid role during the war that Israel launched to eliminate Hamas after the Oct. 7 attacks.

The UK Foreign Office said on Saturday it was temporarily pausing funding for UNRWA while the accusations were reviewed.

"The Italian government has suspended financing of the UNRWA after the atrocious attack on Israel on October 7," Foreign Minister Antonio Tajani said on social media platform X.

The Netherlands and Finland also said they were suspending funding.

Announcing the investigation, UNRWA Commissioner-General Philippe Lazzarini said on Friday that he had decided to terminate the contracts of some staff members to protect the agency's ability to deliver humanitarian assistance.

Lazzarini did not disclose the number of employees allegedly involved in the attacks, nor the nature of their alleged involvement. He said, however, that "any UNRWA employee who was involved in acts of terror" would be held accountable, including through criminal prosecution. During weeks of Israeli bombardment of the Palestinian enclave, UNRWA has repeatedly said its capacity to render humanitarian assistance to people in Gaza is on the verge of collapse.

Hussein al-Sheikh, head of the Palestinians' umbrella political body the Palestine Liberation Organization (PLO), said cutting support to the agency brought major political and relief risks.

"We call on countries that announced the cessation of their support for UNRWA to immediately reverse their decision," he said on X.

The Foreign Ministry in Germany, a major donor to UNRWA, welcomed UNRWA's investigation, saying it was deeply concerned about the allegations raised against agency employees.

"We expect Lazzarini to make it clear within UNRWA's workforce that all forms of hatred and violence are totally unacceptable and will not be tolerated," it said on X.