US lawmakers moved Thursday toward prohibiting any further funding for the UN's embattled agency for Palestinians, which Israel has sought to link to Hamas.

President Joe Biden's administration has already suspended funding for UNRWA -- despite saying its work in war-ravaged Gaza was invaluable -- after Israel alleged that several of its employees participated in the October 7 attack.

A $1.2 trillion funding package hammered out by lawmakers early Thursday says that US government money -- either leftover funds from the current year or in the next fiscal year -- "may not be used for a contribution, grant or other payment" for UNRWA.

Lawmakers released the plan to keep the government running ahead of a deadline of midnight on Friday, when three-quarters of the government will run out of funds if a deal is not reached.

Both the Republican-led House and Democratic-led Senate are expected to approve the plan, which would then be sent to Biden for his signature, despite misgivings by a number of lawmakers about some provisions.

House Speaker Mike Johnson trumpeted the section on UNRWA, saying in a statement that the package "halts funding for the United Nations agency which employed terrorists who participated in the October 7 attacks against Israel."

Israel has accused 12 of UNRWA's roughly 13,000 Gaza employees of participating in the attack, which prompted the Israeli military campaign, and accused the agency of being a front for Hamas, which controls Gaza.

UNRWA said it fired the employees and is now subject to an independent UN investigation.

Israel has long criticized UNRWA, which stands for the UN Relief and World Agency for Palestinian Refugees. It is a major provider of education as well as food to Palestinian refugees, defined as Palestinians who fled or were expelled around the time of Israel's 1948 creation, or their descendants.

This week, Israel barred UNRWA's chief, Philippe Lazzarini, from visiting Gaza, saying he did not go through proper procedures.

The State Department said it provided $121 million to UNRWA in the current fiscal year and that its suspension only affected about $300,000.

Expecting opposition from Republicans to resuming funding, the Biden administration has been reaching out to other countries to make contributions.

Saudi Arabia, which Secretary of State Antony Blinken visited this week, announced Wednesday that it was donating $40 million to UNRWA.