The bill bans the UN agency from conducting "any activity" or providing any service inside Israel.
The legislation has alarmed the United Nations and some of Israel's Western allies who fear it would further worsen the already dire humanitarian situation in Gaza, where Israel has been fighting Hamas militants for a year.
The ban does not refer to operations in the Palestinian territories or elsewhere.
Aid workers say it will be a disaster for Gaza if a law restricting the main UN agency goes ahead. (EPA PHOTO)
The vote passed 92-10 and followed a fiery debate between supporters of the law and its opponents, mostly members of Arab parliamentary parties.
A second bill severing diplomatic ties with UNRWA was also being voted on later on Monday.
An UNRWA spokesperson said prior to the vote that the proposed law would be a "disaster" and would have a serious impact on the humanitarian operation in Gaza and in the occupied West Bank.
"We know that previous attempts that aimed at replacing UNRWA and providing humanitarian assistance have failed miserably," said Juliette Touma, the main spokesperson for the organisation.
"It's outrageous that a member state of the United Nations is working to dismantle a UN agency which also happens to be the largest responder in the humanitarian operation in Gaza."
The vote by the Israeli Parliament against — UNRWA (@UNRWA) @UNRWA is unprecedented. It opposes the @UN Charter and violates the State of Israel's obligations under international law.Failing to push back against these bills will weaken our common multilateral mechanism.This should be a… https://t.co/kx5JJOVEGeOctober 28, 2024
Taken together, these bills would signal a new low in relations between Israel and UNRWA, which Israel accuses of maintaining close ties with Hamas militants.
The changes would also be a serious blow to the agency and to Palestinians in Gaza who have become reliant upon it for aid throughout more than a year of devastating war.
The bills risk crippling the flow of humanitarian aid into Gaza.
More than 1.9 million Palestinians are displaced from their homes and Gaza faces widespread shortages of food, water and medicine.
Israel has alleged that some of UNRWA's thousands of staff members participated in the October 7, 2023, Hamas' attacks that sparked the war in Gaza.
It also has said hundreds of its staff have militant ties and that it has found Hamas military assets near or under UNRWA facilities.
The agency denies it knowingly aids armed groups and says it acts quickly to purge any suspected militants from its ranks.
The bills, which do not include provisions for alternative organisations to oversee its work, have been strongly criticised by international aid groups.
Before the legislation was passed, foreign ministers from France, Germany, Britain, Japan and South Korea, Canada and Australia issued a statement expressing "grave concern."
"It is crucial that UNRWA and other UN organisations and agencies be fully able to deliver humanitarian aid and their assistance to those who need it most, fulfilling their mandates effectively," the statement said.
52 organizations including — Bassam Khawaja (@Bassam_Khawaja) @HRW call on world leaders to act urgently to protect @UNRWA from unprecedented and dangerous attacks it faces from the Israeli government. https://t.co/iuzxLqZQRgOctober 28, 2024
UNRWA provides education, health care and other basic services to millions of Palestinian refugees across the region, including in the Israeli-occupied West Bank.
The bills would go into effect 60 to 90 days after Israel's Foreign Ministry notifies the UN, according to the spokesperson of lawmaker Dan Illouz, one of the co-sponsors of one of the bills.
"If it passes and if it's implemented, it's a disaster" said Touma, communications director for the agency.
"UNRWA is the largest humanitarian organisation in Gaza ... Who can do its job?"
With no end in sight to the war, officials in Gaza reported Monday that the death toll from the yearlong fighting surpassed 43,000.
The Palestinian Health Ministry's count does not distinguish between civilians and combatants but it says more than half of the dead are women and children.
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