The three-man delegation of technical experts, subjected to months of threats and intimidation, halted work after gunmen attacked the United Nations office and shot at the door and windows.

Paul Wolstenholme, project manager, Neil Johnston, construction manager and Mike Luffingham, design manager, expressed dismay at the violent response from the refugees. They had been provided with replacement homes featuring imported Italian marble kitchen tops, costing over £75 a metre, and ceramic tiles. The homes were built to European construction standards.

“You wouldn’t believe how good the properties are,” said Mr Johnston, 50. “The finishing is fantastic.”

In a report obtained by The Times, Mr Johnston told how he had heard shots fired at 1.15pm on June 9 as he was lunching nearby. Mr Luffingham was in the office with dozens of staff members from the Palestinian UN Relief and Works Agency (UNRWA) at the time. “I saw five gunmen leave the office. Two had pistols and three had rifles, and one of the men who had a pistol fired twice in the air as he was walking along the path from the office,” he said.

“One of the gunmen was hysterical and fired a shot up at the office and I saw the bullet strike the building.”

Work has been halted on the construction of 435 flats, funded with £15 million from the United Arab Emirates Red Crescent Authority. The British team was supplied by the Department For International Development.

The original camp buildings were demolished by Israeli bulldozers during a siege in April 2002 in which 52 Palestinians were killed by Israeli troops using tanks and helicopter gunships. Twenty-three Israeli soldiers died.

The battle left a residue of bitterness and suspicion in Jenin, long a stronghold for Palestinian militant groups and now increasingly lawless because of the near collapse of the Palestinian Authority. Many of the camp’s 14,000 inhabitants, the oldest of whom remember fleeing their Arab villages in 1948, harbour suspicions that attempts to rebuild and move them to less crowded areas would undermine their position as refugees, and weaken the camp’ s ability to defend itself against any future Israeli raids.

Three quarters of the new flats are being built on the cleared area, with wider access roads than in the old, cramped site. Some are already complete, with residents adding sandstone cladding, balconies, carriage lamps and other accessories at their own cost.

Others remain half-finished, including building No 471 — the largest in the camp and the cause of the dispute. Local people yesterday claimed that one powerful clan had bullied contractors into extending the clan’s site at the expense of neighbours, who then took out their grievances on the UN.

“I have come to help these innocent individuals who lost their houses through no fault of their own — and what do I get but harassment, threats and not one word of thanks,” said one of the Britons. “It is down to greedy individuals who are not satisfied with what they are getting and who use intimidation, violence and personal connections to local leaders.”

Abu Kamel, of the Palestine Liberation Organisation’s Department of Refugee Affairs, deplored the attack. He blamed “frustrated young hotheads”. Others suggested that the gunmen believed they could raise international awareness of grievances about special treatment if they targeted the UN.

Akram Abu al-Sbaa, a member of the camp committee, said: “We denounce it, but try to understand. They are under a lot of pressure. It has been two years and these people have suffered a lot.”

In the project’s early months, Iain Hook, the former team leader, was shot dead by an Israeli sniper in another UNRWA compound.

Mr Wolstenholme, who held the dying Mr Hook in his arms, was himself detained, handcuffed and blindfolded by Israeli soldiers who, he says, threatened to break his arms while holding him for several hours even though they knew he was a UNRWA official.

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