The United Statesinfo-icon will withhold $65m in aid for a UN agency that provides services for Palestinian refugees, a USinfo-icon official said on Tuesday, as the Trump administration appeared to carry out a threat it made two weeks ago.

While saying the decision to provide only $60m in funding would sustain schools and healthinfo-icon services, the US official echoed Donald Trumpinfo-icon in calling on other nations to provide more funds because he believes Washington pays more than its share.

A Palestinian official quickly criticised Washington's decision to withhold some of the money and United Nationsinfo-icon Secretary-General Antonio Guterres said he was unaware of any change on aid but he was "very concerned" about the possibility of a cut in funding.

The US official, who spoke to Reuters on condition of anonymity, said the United Nations Relief and Works Agency for Palestinian Refugees (UNRWA) needed to be fundamentally reevaluated "in the way it operates and the way it is funded".

"Without the funds we are providing today, UNRWA operations were at risk of running out of funds and closing down,"  the official said. "The funds provided by the United States will prevent that from happening for the immediate future."The additional "$65 million will be held for future consideration," he added.

In a Twitterinfo-icon post on 2 January, Trump accused Palestinians of disrespecting the US despite receiving millions of dollars in aid from Washington.

It's not only Pakistaninfo-icon that we pay billions of dollars to for nothing, but also many other countries, and others. As an example, we pay the Palestinians HUNDRED OF MILLIONS OF DOLLARS a year and get no appreciation or respect. They don't even want to negotiate a long overdue... 

Israelinfo-icon had urged the US to stop funding UNRWA, with Prime Minister Benjamin Netanyahu saying last week that the agency "must disappear from the worldinfo-icon".In a statement on behalf of the PLO Executive Committee, Hanan Ashrawi accused the White House of "following Netanyahu's instructions".

She added that the US administration is targeting vulnerable Palestinians and "depriving the refugees of the right to education, health, shelter and a dignified life".

The agency has laid off dozens of staff members in the West Bank and East Jerusaleminfo-icon and more than 100 employees in Jordaninfo-icon because of the delay and subsequent cut in the US payment, Haaretz reported on Monday. 

On Monday, the PLO Central Council condemned the Trump administration for threats to cut UNRWA funding, saying that Washington is trying to absolve itself of responsibility for the Palestinian refugee crisis that it helped create in 1948.

More than 600,000 Palestinians were pushed out or forced to flee their homes before and during 1948 when the State of Israel was established.Millions of Palestinian refugees, 1948 survivors and their descendants, are scattered in the West Bank and Gazainfo-icon Strip and across neighbouring Arab countries.They largely depend on UNRWA aid for health care, education and other essential services.

The Norwegian Refugee Council (NRC), which aids displaced people across the world, warned that the US move would have "devastating consequences" on hundreds of thousands of Palestinians who depend on UNRWA services to survive.

"We hope that the US administration and Congress can cooperate in reversing this politically motivated cut in aid before its effects ripple through the Middle Eastinfo-icon," NRC Secretary General Jan Egeland said in a statement.

"In the meantime, we call on other donor nations to stand with UNRWA and Palestinian refugees and cover the massive shortfall left by the US administration."In a Twitter post, Kenneth Roth, executive director of Human Rightsinfo-icon Watch said the US was "holding Palestinian kids' humanitarian needs hostage to political agendas". 

US is withholding $65 million in funding to @UNRWA, a bullying tactic that threatens to shut down critical programs for an org that serves 5.3 million refugees, operates 711 schools & 143 health clinics. pic.twitter.com/JaEVuHMAbh

Embedded rich media on Twitter

A t the United Nations, Guterres told reporters that the services provided by UNRWA were "of extreme importance, not only for the well-being of these populations ... but also in my opinion and an opinion that is shared by most international observers, including some Israeli ones, it is an important factor of stability".

The Turkish Ministry of Foreign Affairs said cuts to UNRWA will "hamper the efforts towards a two-state political solution and regional stability," adding that Ankara will increase its contributions to the agency.