US President Donald Trump’s Middle East peace envoy and son-in-law Jared Kushner has reportedly asked Jordan to withdraw the refugee status of the more than two million Palestinians living in the country.

The revelations prompted condemnation in Jordan on Saturday and for the second time in less than a year could put King Abdullah in a difficult position between national sensitivities and his alliance with America.

The White House plan was first reported by the US publication Foreign Policy, which said Mr Kushner and colleague Jason Greenblatt made the request in a meeting in Amman in June.

They did so as part of an effort to take the issue of refugees off the negotiation table, according to the report.

The leak comes as Mr Kushner is said to be building a team to introduce his much touted but still little-known “ultimate deal” between Israelis and Palestinians.

Under Mr Kushner’s proposal, funding from the US and Gulf states directly to Jordan would be used to replace the services formally provided by UNRWA, the UN agency for assisting Palestinian refugees. Jordan would become the direct provider for Palestinian beneficiaries, who would no longer be considered refugees.

A key component to the unreleased peace deal, according to various statements by Mr Kushner and leaks from his recent visit to the region, is the provision of economic aid that would be used as compensation to Palestinians living in the West Bank and Gaza who would be without a viable state, and to the Palestinian refugees in Jordan and Lebanon who would lose their right to return to their homeland.

Mr Kushner and other White House officials working on the Middle East peace plan want to dismantle the UNRWA, according to internal emails obtained by Foreign Policy.

“It is important to have an honest and sincere effort to disrupt UNRWA,” Mr Kushner wrote on January 11. “This [agency] perpetuates a status quo, is corrupt, inefficient and doesn’t help peace.”

However, Jordanian Foreign Minister Ayman Safadi on Saturday warned of the “serious consequences” should UNRWA’s services be disrupted, and called on the international community to uphold the UN agency’s mandate and international resolutions concerning the final status of Palestinian refugees.

In a phone conversation with UNRWA chief Pierre Krahenbuhl, Mr Safadi said enabling the agency to carry out its mission was an “international responsibility” and that “final status issues must be resolved according to the relevant international resolutions” particularly UN Resolution 194, and the Arab Peace Initiative which lay out the Palestinian right of return and compensation.

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Jordanian officials could not be reached for comment on Saturday but Oraib Rantawi, director of the Al Quds Centre for Political Studies, said the US stance, if confirmed, was "no longer a Palestinian issue" but "an issue of Jordanian national security, stability and interests”.

“This is the most sensitive issue in Jordan and one that cuts to our very national fabric and identity.”

Jordan hosts about 2.2 million registered Palestinian refugees, but the number of Jordanians of Palestinian origin is estimated to be more than 3 million, or nearly half of Jordan’s 6.6 million citizens.

Sources familiar with Jordan’s stance on the peace talks say the kingdom has rejected any discussion on the status of Palestinian refugees in Jordan with the US and insisted that the right of return must be part of the establishment of an independent and viable Palestinian state.

Yet the US withdrawal of funding for UNRWA and support for its dismantling when its mandate comes up for renewal next year would cut deep in Jordan.

The agency administers 10 refugee camps across the country, some the size of small cities; more than 120,000 students rely on 171 UNRWA schools; and its 24 health clinics serve 1.1 million Palestinian refugees.

It is already facing a $217 million deficit, and the US is threatening to withhold $300m in funding.

With Jordan's health and education systems under added strain from the influx of 1.3 million Syrian refugees, officials have said the loss of UNRWA services could be catastrophic.

Although there have been rumblings in Jordan since January about mounting US pressure for Amman to yield its demands for a two-state solution and the status of Jerusalem, this is the first time Washington's demands have publicly been said to also include the final status of Jordan’s Palestinian refugees.

If true, it is potentially more destabilising than the worst fears of many Jordanians.

“Kushner thinks he can buy Jordan with $300m, the amount due to UNRWA, to resettle refugees and reverse seven decades of policy — this is something that is not an option for Jordan,” Mr Rantawi said.

Several Palestinian-Jordanian community leaders refused to comment, not wanting to fan “inflammatory rhetoric” and “threaten national unity”, but Jordanian MPs said they were willing to help lead the charge against the Mr Kushner's "ultimate deal".

They said surrendering the right of return of Palestinian refugees, enshrined not only by the UN but by a declaration by King Abdullah I in 1948, is so objectionable to the Arab public across the region it is “political suicide”.

A Palestinian man stands in front of the UNRWA offices in Gaza City on July 31, 2018. AFP

“When it comes to the Palestinian cause, East Bank Jordanians, Palestinian-Jordanians, and all Arabs are united,” said Sadah Habashneh, an MP from the southern city of Karak.

“There may be differences between us but when it comes to the Palestinian cause, the right of return of Palestinian refugees and the status of Jerusalem and its holy sites, these are red lines for all of us.”

He said Jordanian MPs were confident Arab states would find other sources to fund UNRWA. “It is impossible for Jordan to agree or be party to such an agreement, as it will be the most harmed by the so-called ultimate deal.”

The issue is, for the second time in less than a year, putting Jordan in a difficult position over its alliance with the US.

The first was the relocation of the US embassy to Jerusalem in May, a deeply unpopular move that not only sparked protests in Jordan and challenged the international status of the holy city, but undercut the Hashemite monarchy’s custodianship of Muslim and Christian holy sites in Jerusalem — a status enshrined in the kingdom’s 1994 peace treaty with Israel.

Washington remains the largest donor to Jordan, with an average of $1.3 billion in assistance annually through 2022. The kingdom faces a recurring budget deficit, estimated at $737m for this year, while attempts to reduce this through tax increases and austerity measures led to widespread protests less than two months ago that brought down the government of Hani Mulki and brought economic reforms to a standstill.

Rather than oppose the Kushner plan publicly, officials and observers have suggested that Jordan hopes to run down the clock — limit the negative fallout of the Trump government’s aggressive approach while hoping for the “ultimate deal” to collapse on its own.

“We may reach a point where if the American administration continues to conduct itself this way, Jordan’s friendship with the US will be much more costly than any other potential benefit,” Mr Rantawi said.