VIENNA - Austria said on Saturday it will restore its funding to the UN agency for Palestinian refugees after suspending it over allegations that staff were involved in the October 7 Hamas attacks.

Israel alleged in January that some United Nations Relief and Works Agency (UNRWA) employees may have participated in the Hamas attacks on October 7 that triggered the war in the Gaza Strip.

In the weeks that followed, numerous donor states, including Austria, suspended or paused some $450 million in funding.

Many, including Germany, Sweden, Canada and Japan, had since resumed funding, while others have continued to hold out.

"After analysing the action plan in detail" submitted by UNRWA "to improve the functioning of the organisation", Austria has decided to "release the funds," its foreign ministry said in a statement.

A total of 3.4 million euros ($3.7 million) in funds have been budgeted for 2024, and the first payment is expected to be made in the summer, the statement said.

"Some of the Austrian funds will be used in the future to improve internal control mechanisms at UNRWA," it added.

Austria said it will "closely monitor" the implementation of the action plan with other international partners, noting that "a lot of trust had been squandered".