Israel has banned the British Interpal organisation from continuing its operations in the West Bank and Gaza Strip, claiming it has financial links to Hamas.

Interpal, also known as the Palestinian Relief and Development Fund, was designed in 1994 with the stated aim of alleviating the needs of Palestinians in a number of countries including Israel, Jordan and Lebanon.

Since 1996, however, it has faced questions from Israel and the US about its funding network and alleged connections to the Islamists. In 1997, it was labelled an "unlawful organisation" by Israel and as a "specifically designated global terrorist" grouping by America in 2003.

The group has not replied to Israel's decision today, which comes about after an investigation into its finances, although it has strongly denied wrongdoing in past cases.

In December 2006, it emerged that George Galloway, MP for the left-wing Respect party, had chosen the charity to benefit from text votes generated in his name during the three-week Celebrity Big Brother series.

At the time, Mr Galloway released a statement, which read: “Every smear against them has fallen away and the truth about their work amongst some of the most oppressed people on the Earth has prevailed.”

Announcing Israel was banning Interpal, Ehud Barak, the Israeli Defence Minister, issued a statement listing it among 36 charities in Israel and the Palestinian territories that have ties to terror groups.

A military spokesman added that the army was acting "against charitable organisations acting on behalf of Hamas."

He said the organisations named by Mr Barak sought to strengthen the Islamist movement, "to encourage terrorist attacks against Israel" and "to give financial support to terrorism infrastructure."

Israel, like the European Union and the United States, blacklists Hamas as a terrorist organisation. Hamas, which won a legislative victory in the 2006 Palestinian parliamentary elections, formed a unity government with the pro-Western Fatah grouping before launching a military coup and routing Fatah forces loyal to Mahmoud Abbas, the President, and seizing control of Gaza Strip a year ago.

Since that time, Israel has imposed a crippling embargo on the Gaza Strip, and taken increased measures to stop the flow of funds to Hamas, which refuses to recognise Israel's right to exist or renounce terrorism.

Earlier this year, the Army shut down several warehouses and offices of the Islamic Charity Movement and the Islamic Youth Association in the southern West Bank town of Hebron, saying they were used to funnel funds to Hamas's military wing.

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