Tuesday’s announced cut alarmed United Nations officials and aid groups that regard the United Nations Relief and Works Agency as a critical pillar of well-being for Palestinian refugees in the West Bank and Gaza and in neighboring countries.

The Norwegian Refugee Council, which works in more than 30 countries, urged the Trump administration to reconsider, saying that the funding reduction will have “devastating consequences for vulnerable Palestinian refugees across the Middle East.”

At the United Nations, Secretary General António Guterres said he was “very concerned” about any cuts to the agency.

He said the relief agency’s services were of “extreme importance” to the populations of Palestinians who had lived as refugees for 70 years. Mr. Guterres said that was not only his opinion but “an opinion that is shared by most international observers, including some Israeli ones.”

Many Israelis worry that any rapid reduction in such aid could destabilize the region and force Israel to pick up a larger share of the costs. Jordan, where many Palestinians have settled, is also coping with a huge influx of Syrian refugees.

“That the Trump administration is using humanitarian aid for schools and hospitals as a cudgel to punish those who disagree with their policy decisions is deeply troubling,” said Jeremy Ben-Ami, president of J Street, a Washington-based liberal advocacy group for peace in the region.

Robert B. Satloff, executive director of the Washington Institute for Near East Policy, said he was “not a fan of massive cuts” to funding for the relief agency, saying he would prefer other solutions, such as changes to how Palestinians become eligible for refugee status.