Israel's government ordered UNRWA to vacate its East Jerusalem compound and cease operations under a law passed last year outlawing the agency and prohibiting Israeli authorities from having contact with it.

At UNRWA's offices in East Jerusalem's Sheikh Jarrah neighbourhood, workers were packing boxes and loading portable buildings onto a truck on Monday.

"It's an unacceptable decision," said Jonathan Fowler, a spokesperson for UNRWA, formally titled the United Nations Relief and Works Agency for Palestine Refugees in the Near East.

"The people that we serve ... we are not able to tell them what is going to happen to our services as of the end of this week."

Israel has not announced provisions for replacing UNRWA's activities, and the Israeli prime minister's office did not immediately respond to a request for comment.

UNRWA has for decades run schools and clinics in East Jerusalem, the eastern part of the city that Israel has occupied since a 1967 war, for tens of thousands of Palestinian refugees who have no nationality.

"We have everything here for us. When I heard that it will close, I was very sad because here is a place for people in need and for people who don’t have money to pay for medication," refugee Sara Saeed said at the UNRWA medical centre in Jerusalem's Old City.

Medical centre Director Hamza Al Jibrini said the facility serves 30,000 refugees. Among them are patients with diabetes and high blood pressure, pregnant women and children who receive vaccinations, said head of nursing Manal AlKhayat.

"Where they will go?" she asked.

Israel's ban only directly covers Israeli territory, which Israel considers East Jerusalem to be. UNRWA also operates in the occupied West Bank and Gaza, but it was unclear how the law will affect UNRWA's work there.

ISRAEL CLAIMS BIAS

UNRWA was established some 75 years ago, serving around 750,000 Palestinian refugees from the 1948 war at the time of the creation of the state of Israel.

Its sprawling headquarters are in a prime position not far from Jerusalem's Old City, which is home to sites holy to Christians, Jews and Muslims. The agency has long been a thorn in the eye of Israeli governments that considered the agency fundamentally hostile to Israel.

Israel says UNRWA's continued existence decades after the 1948 war has consolidated the refugee status of generations of Palestinians, who now number in the millions, and has frozen the conflict in place.

Israel regularly accuses the agency of anti-Israel bias and has also claimed its staff includes members of Hamas, the Palestinian militant group that launched the deadly cross-border raid on Israel on Oct 7, 2023. Israel calls for UNRWA's responsibilities to be taken over by other UN bodies such as its main refugee agency.

The U.N. rejects accusations of bias and says that UNRWA's expertise is irreplaceable, particularly in Gaza.

A U.N. investigation found that nine UNRWA staff may have been involved in the Hamas attack. The agency fired them but said Israel had not provided evidence of more widespread involvement by its staff. UNRWA employs around 30,000 people in the region and some 13,000 in the Gaza Strip.

More than 200 UNRWA staff have been killed in Gaza, the agency says, since the Gaza war started. Around 1,200 Israelis and foreigners were killed in the Oct. 7, 2023 attack and another 250 were taken hostage into Gaza, Israel says.

Over 47,000 Palestinians have been killed in Gaza since Israel's military launched a retaliatory offensive, according to Gaza's health ministry.