The Commission also said in Friday's announcement that it would increase total aid to the Palestinians by 68 million euros this year to help civilians facing "horrific conditions" during the Israel-Hamas war in Gaza.

UNRWA provides basic aid and services to Palestinians trapped in the Gaza war, but it was thrown into crisis after Israel claimed in January that 12 of the agency's 13,000 employees in the Strip were involved in a Hamas attack on October 7, which Israel says killed 1,200 people and detained more than 250 hostages.

UNRWA dismissed all the accused employees, but warned that its operations would be “at serious risk” after many donors, including the United States, Britain and several European Union countries, decided to suspend funding or said they would not agree to provide new funding until the matter was resolved.

The European Commission, one of UNRWA's major donors, is owed 82 million euros to the agency so far.

But the Commission said it would pay 60 percent now and the rest in two installments of 16 million euros each while it addresses problems resulting from the allegations.

“The first transfer is a really important step to ease the situation in Gaza,” European Union foreign policy chief Josep Borrell said on the social media platform X.

He added, "By continuing to fund UNRWA, the European Union recognizes that the agency is an indispensable actor."

UNRWA Commissioner-General Philippe Lazzarini said that the Commission's decision will support UNRWA in providing "life-saving and basic services" to Palestinian refugees.

But he added that UNRWA needs 82 million euros, the full amount, as soon as possible.