Humanitarian groups have condemned Israel’s ban of a major Palestinian aid agency with concerns it will exacerbate an already dire crisis in Gaza.

Foreign Minister Penny Wong and her counterparts from Canada, France, Germany, Japan, South Korea and Britain expressed “grave concern”, saying the UN Relief and Works Agency for Palestine Refugees provided critical aid services.

Israel’s Knesset passed laws which will ban the agency from working on Israeli soil, deeming it a terror group.

Blocking the organisation would have “devastating consequences on an already critical and rapidly deteriorating humanitarian situation, particularly in northern Gaza,” the foreign ministers said in a joint statement.

“We urge the Israeli government to … live up to its responsibility to facilitate full, rapid, safe and unhindered humanitarian assistance,” it said.

The agency did life-saving work, Senator Wong said, as she opposed the Knesset decision and called on Israel to abide by an International Court of Justice ruling to enable humanitarian assistance at scale.

Australia made representations to Israel ahead of the vote.

Humanitarian groups Oxfam, ActionAid, the Australian Council for International Development, Save the Children and Caritas all condemned Israel’s move.

More than 42,000 people have been killed in Gaza since the start of Israel’s offensive, according to the local health authority, and thousands more remained buried under rubble or missing.

Aid was already being throttled to about five per cent of pre-conflict levels and any further reduction would be “incomprehensible”, Sally Thomas of Caritas said, adding it made the imperative for a ceasefire even more critical.

“The humanitarian emergency in Gaza is one of historic proportions, it is one of the most intense famines in recent history, the deadliest for children and the deadliest for … healthcare workers,” she said.

The Australian Federation of Islamic Councils said it showed Israel’s flagrant disregard for international law while the Australia Palestine Advocacy Network and the Greens renewed calls for sanctions.

Australia needed to do more than just condemn Israel with the latest development “a very clear transgression of the ICJ ruling to not impede aid to civilians”, independent senator David Pocock said.

There needed to be more consistency with sanctions as Australia has employed the measure against other human rights abuses internationally, he said.

“Let’s be our own country, and be able to make these calls that align with the values that I hear from so many Australians that they want to see reflected by our leaders,” he told reporters in Canberra.

Israel has consistently attacked the agency after accusing a handful of its staff of participating in the attack by Hamas on October 7, 2023 that killed about 1200 people and resulted in 250 hostages being taken, according to Israeli figures.

The organisation fired nine people but there wasn’t enough evidence to substantiate claims against 10 others after investigations were concluded in August 2024.

Israel maintains the agency has links to Hamas and the designated terror group uses its infrastructure for operations, both of which the aid organisation denies knowingly being involved in.

Israel has called for aid to flow through other organisations, but Australia and humanitarian groups say there are no viable alternatives to replace the UN agency due to its scale and reach.

It has about 30,000 employees, including 13,000 in Gaza.

Australia paused humanitarian aid to the agency after the allegations were made and only reinstated it following a comprehensive probity agreement and after intelligence agencies confirmed it wasn’t a terrorist organisation.