Palestinian men and children gather for a demonstration in Rafah, calling for continued international support to UNRWA on Wednesday. AFP

"Yesterday, I met with donors to listen to their concerns and to outline the steps we are taking to address them... UNRWA is the backbone of all humanitarian response in Gaza," Guterres told a UN committee on Palestinian rights.

Withholding UNRWA funding was "perilous and would result in the collapse of the humanitarian system in Gaza," the heads of the UN agencies said in a joint statement on Tuesday.

The dispute intensified earlier on Tuesday after Israel accused UNRWA of allowing Hamas to use agency infrastructure in Gaza for military activity.

UNRWA said it has acted promptly over allegations by Israel that 12 of its staff were involved in the Hamas attacks. Washington, Britain, Germany and Japan are among countries to have suspended payments in light of those disclosures.

The UN agency has long been under scrutiny by Israel, which accuses it of systematically going against the country's interests.

Israel has vowed to stop the agency's work in Gaza after the war and doubled down on Tuesday when government spokesman Eylon Levy said UNRWA "has been fundamentally compromised."

UNRWA 'beating heart' of Gaza aid

The UN's humanitarian chief Martin Griffiths said the entire humanitarian system — with UNRWA at its center — was committed to delivering aid to Gaza.

"The breadth of the humanitarian community — including UN agencies, NGOs, the Red Cross and the Red Crescent — is collaborating to ensure that aid reaches people in need to the greatest extent possible," he told the UN Security Council.

"You will not be surprised to hear that at the beating heart of this is UNRWA. "Our humanitarian response for the occupied Palestinian territories is dependent on UNRWA being adequately funded and operational. "Of course we would like to see decisions to withhold funds from UNRWA revoked."

UN Gaza aid coordinator Sigrid Kaag said "there is no way that any organisation can replace or substitute (the) tremendous capacity... of UNRWA."

Agence France-Presse