The United Nations refugee agency for Palestinians said Israeli authorities did not inform the group of a plan regarding shutting down UNRWA-run schools in occupied East Jerusalem.

Israeli media reported that the state's National Security Council will revoke permits allowing UNRWA schools to operate starting next school year. The schools will be replaced by schools run by the Jerusalem municipality, supported by Israel's education ministry.

"UNRWA's existence in Jerusalem is not a gift from Israel," Sami Meshasha, the spokesperson for the agency said in a press statement on Sunday.

"There are bilateral agreements binding on Israel to respect the agency's installations, jurisdiction and immunity in Jerusalem," he said.

"In addition, Israel is a party to the 1946 Refugee Convention, and such attempts are in violation of this Convention."

UNRWA runs seven schools in two refugee camps in occupied East Jerusalem, serving a total of 3,000 students.

The Israeli plan is the latest blow to the agency, after the United States's decision last year to halt its funding.

Hanan Ashrawi, a member of the Palestinian Liberation Organisation executive committee, said the Israeli decision is "a direct insult to the international community and disregard for its laws and decisions and institutions".

"This provocative step deliberately targets Palestinian refugees and their rights guaranteed by international and humanitarian law," she said in a statement carried by Palestinian official news agency Wafa.

"It also targets Jerusalem and its institutions within the framework of the occupying state's strategy of Judaizing the Holy City, promoting the policy of ethnic cleansing, forced displacement, extending control over all aspects of life, and imposing new facts on the ground," she added.

Back in October, Jerusalem's former Israeli mayor Nir Barakat accused UNRWA's services of operating illegally and promoting incitement against Israel.

"We are putting an end to the lie of the 'Palestinian refugee problem' and the attempts at creating a false sovereignty within a sovereignty," Barkat said at the time.

He said schools, clinics and sports centres among other services would be transferred to Israeli authorities.

UNRWA was established in 1949 after 700,000 Palestinians were forcibly displaced from their homes by Zionist paramilitaries in the run-up to the establishment of the state of Israel.

It currently provides services to five million Palestinian refugees in the occupied West Bank and Gaza Strip, as well as Jordan, Lebanon and Syria.

Palestinians in East Jerusalem have Israeli residency cards but are not Israeli citizens. For decades, they have complained of systematic discrimination by the city in the way it distributes municipal services.