The Donald Trump administration would come up with a formal announcement in the next few weeks, a senior administration official told CNN late on Friday.
The State Department on Friday described the agency as irredeemably flawed and that the US administration has carefully reviewed the issue and will not make additional contributions to Unrwa, spokeswoman Heather Nauert said.
A spokesman for Palestinian President Mahmoud Abbas later said the move was a flagrant assault against his people.
Such a punishment will not succeed to change the fact that the US no longer has a role in the region and that it is not a part of the solution, Nabil Abu Rudeina was quoted as saying by the Times of Israel.
He added that the decision was in defiance of UN resolutions.
We reject in the strongest possible terms the criticism that Unrwa’s schools, health centres, and emergency assistance programs are ‘irredeemably flawed’, Unrwa spokesman Chris Gunness tweeted.
The latest move comes after the US announced back in January that it would withhold more than half of a tranche of funding for the agency, the BBC reported.
The decision was made at a meeting between Jared Kushner, President Trump’s son-in-law and a White House senior adviser and Secretary of State Mike Pompeo. US Ambassador to the UN Nikki Haley had also been pushing for the move.
Unrwa was originally set up to take care of hundreds of thousands of Palestinians displaced by the 1948 Arab-Israeli War. It supports more than five million people across the Middle East.
Unrwa offers educational, health and social services across the West Bank, Gaza, Jordan, Syria and Lebanon to registered Palestinian refugees.
The agency educates about 500,000 children in nearly 700 schools and its doctors see more than nine million patients in nearly 150 primary health clinics every year.
The Palestinian Islamist group Hamas on Saturday condemned the US’ decision which will affect services provided to Palestinian refugees located in Syria, Jordan, Lebanon, the Gaza Strip, West Bank and East Jerusalem.
Hamas’ spokesperson Sami Abu Zuhri said in a statement that the decision makes the US administration the enemy of Palestinians, Arabs and Muslims.
Secretary-General of the executive committee of the Palestine Liberation Organization Saeb Erekat said: Unrwa is not an institution of the Palestinian National Authority.
It was created by a resolution of the UN and therefore the entire international community must reject and condemn the American decision.
The Unrwa was established under Resolution 302 of 1949 to aid people in the camps until the refugee issue is settled.
The US has been the largest single donor to Unrwa, providing $368 million in 2016 and funding almost 30 per cent of its operations in the region.
The Donald Trump administration had pledged $60 million to Unrwa in January, but withheld another $65 million pending a review. That remaining payment is now expected to be cancelled.