Jerusalem, Israel - Israel will cut ties with the UN agency for Palestinian refugees on Thursday, a move likely to even further hamper delivery of vital services to the people of Gaza.

The agency, UNRWA, will be banned from operating on Israeli soil, and contact between it and Israeli officials will also be forbidden.

UNRWA has provided support for Palestinian refugees around the Middle East for over 70 years.

Tensions came to a head in the wake of Hamas' October 7, 2023, attack on Israel, with Israel claiming that a dozen UNRWA employees were involved.

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"Humanitarian aid doesn't equal UNRWA, and UNRWA doesn't equal humanitarian aid. UNRWA equals an organization infested with Hamas terror activity," Israeli foreign ministry spokesperson Oren Marmorstein wrote on social media platform X ahead of the ban.

"This is why, beginning on January 30 and in accordance with Israeli law, Israel will have no contact with UNRWA."

The agency's offices and staff in Israel play a major role in the provision of healthcare and education to Palestinians, including those living in the Gaza Strip, which has been devastated by 15 months of all-out Israeli assault.

Later on Wednesday, Israel's Supreme Court rejected a petition by Palestinian human rights group Adalah contesting the UNRWA ban.

The court did note that the legislation "prohibits UNRWA activity only on the sovereign territory of the State of Israel," but "does not prohibit such activity in the areas of Judea-Samaria and the Gaza Strip," referring to the West Bank by its biblical name.

The ban does apply, however, to Israeli-annexed east Jerusalem, where UNRWA has a field headquarters for its operations in the West Bank.

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In a statement reacting to the judgement, Adalah said the law would come into effect "disregarding the catastrophic humanitarian consequences."

The move, which has been backed by the US, has drawn condemnation from aid groups and others.

The agency says it has brought in 60% of the food aid that has reached Gaza since October 2023 attack.

Israeli envoy to the United Nations Danny Danon told the UN Security Council on Tuesday that UNRWA must cease its operations and evacuate all premises it operates in annexed east Jerusalem on Thursday.

In response, UN chief Antonio Guterres demanded that Israel rescind its order.

"I regret this decision and request that the government of Israel retract it," he said, stressing that UNRWA was "irreplaceable."

The agency's chief, Philippe Lazzarini, said UNRWA's capacity to distribute aid "far exceeds that of any other entity." He called Israel's actions against UNRWA a "relentless assault... harming the lives and future of Palestinians across the occupied Palestinian territory."

Israel insists that other agencies can pick up the slack to provide essential services, aid, and reconstruction – something the UN and many donor governments dispute.

A series of investigations, including one led by former French foreign minister Catherine Colonna, found some "neutrality-related issues" at UNRWA, but stressed Israel had not provided evidence for its headline allegation.

Under US President Donald Trump, who returned to the White House earlier this month, Washington has thrown its weight behind Israel's move, accusing UNRWA of overstating the impact of the decision.