The UK government is “appalled” by allegations UNRWA staff were involved in 7 October attacks.
The UK has become the latest country to pause funding for the UN agency for Palestinians, UNRWA.
It comes after the agency announced the sacking of several of its staff over allegations they were involved in the 7 October Hamas attacks.
The UK government said it was “appalled” by the allegations made by Israel.
The US, Australia, Italy and Canada have already suspended additional funding to the UN agency.
Created in 1949, UNRWA provides health care, education and other humanitarian aid to Palestinians in Gaza, the West Bank, Jordan, Lebanon and Syria. It employs around 13,000 people inside Gaza.
Since Israel began its offensive in response to the 7 October attacks, UNRWA has used its facilities across Gaza to shelter hundreds of thousands of displaced civilians.
It says it has ordered an investigation into information supplied by Israel.
On Friday, an adviser to the Israeli prime minister told the BBC that the 7 October Hamas attacks had involved “people who are on their [UNRWA] salaries”.
Mark Regev said there was information showing teachers working in UNRWA schools had “openly celebrated” the 7 October attacks.
He also referred to an Israeli hostage who, on her release, said she had been “held in the house of someone who worked for UNRWA”.
“They have a union which is controlled by Hamas and I think it’s high time that the UN investigated these links between UNRWA and Hamas,” he added.
The allegations prompted reaction from major donors.
“The UK is appalled by allegations that UNRWA staff were involved in the 7 October attack against Israel, a heinous act of terrorism that the UK Government has repeatedly condemned,” the UK Foreign Office said in a statement.
“The UK is temporarily pausing any future funding of UNWRA whilst we review these concerning allegations,” it added.
Earlier, the US State Department announced that it was suspending additional funding to the UN agency, saying it was “extremely troubled” by the allegations of UN staff involvement in the attacks.
The EU said that it would assess further steps “based on the result of the full and comprehensive investigation”.
UN Secretary-General Antonio Guterres said he was “horrified by this news”.
The head of UNRWA, Philippe Lazzarini, said a full investigation into the allegations was being carried out “to establish the truth without delay.”
“To protect the agency’s ability to deliver humanitarian assistance, I have taken the decision to immediately terminate the contracts of these staff members,” Mr Lazzarini added.
He said any staff found to have been involved in “acts of terror” would be held accountable.
Israel’s Foreign Minister, Israel Katz said he aimed to stop UNRWA operating in Gaza after the war.
But the Palestinian Authority’s minister for civilian affairs, Hussein Al-Sheikh, said the decision by some countries to pause support for the vital UN agency “entails great political and humanitarian relief risks”.
Mr al-Sheikh urged Western donors to immediately reverse their decision, adding: “We need the maximum support for this international organisation.”
In a post on Telegram, Hamas’s press office said the group urged the UN and the international organisations “to not cave in to the threats and blackmail” from Israel.
Hamas killed 1,300 people, mostly civilians, in the unprecedented attack on southern Israeli communities on 7 October last year.
Another 250 people were taken hostage. The events triggered Israel’s retaliatory attacks on Hamas in Gaza, which have killed more than 26,000 Palestinians, according to the territory’s Hamas-run health ministry.
The US, Germany and the EU are among some of UNRWA’s biggest donors.
The agency says it is struggling to get humanitarian aid to many of the estimated 1.7 million people – nearly three-quarters of the population – displaced by 12 weeks of fighting.
A number of UN facilities where Gazans had taken shelter have been hit in Israeli air strikes.
On Wednesday, 12 people were killed when a UN shelter was struck in Khan Younis in southern Gaza.