The federal Liberals are open to restoring funding for a controversial UN agency that works with Palestinians and was cut off by the former Conservative government over its alleged ties to Hamas, International Development Minister Marie-Claude Bibeau confirmed Sunday.

The government has indicated it wants Canada to return to its role as an "honest broker" in the region while remaining closely allied with Israel. It is now reviewing whether to extend humanitarian funding for the United Nations Relief and Works Agency, which was established in 1950 to deal with Palestinian refugees and continues to work in Gaza, Jordan, Syria and Lebanon.

"The channel of communication is open," Ms. Bibeau said on CTV's Question Period with The Globe and Mail's Robert Fife, which aired Sunday. "We're discussing it; we're evaluating the situation. And a decision will be taken shortly."

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The Liberals are eyeing a plan to provide $15-million to the Palestinian relief agency, The Globe and Mail reported earlier this month. But B'nai Brith Canada, a leading Jewish lobby group, said Sunday that it strongly opposes the resumption of funding to UNRWA.

The agency has been criticized by conservative and pro-Israel lobbyists in Canada and the United States for working closely with Hamas supporters in Gaza by providing schools and employment and humanitarian assistance for Palestinians who are still considered refugees by the United Nations. Hamas – which provides local government for Palestinians in Gaza – has been designated as a terrorist group by the U.S. and Canada.

The former Harper government eliminated its ongoing funding for UNRWA in 2010, amid mounting criticism that its schools were hotbeds of anti-Israeli extremism, but gave $14-million in emergency food support in 2012.

Conservative foreign affairs critic James Bezan said his party opposes any financing for UNRWA, arguing the agency has "provided directly and indirectly to Hamas fighters." He added: "We don't want a single taxpayer dollar going to the support of jihadi terrorists."

However, UNRWA spokesman Chris Gunness said there is "no evidence whatsoever" that the agency is financing terrorism.

"This is a false allegation which we reject," Mr. Gunness said in an e-mail Sunday. "We take active steps to safeguard our neutrality and we do this to the satisfaction of our major donors such as the United States, which is our single largest donor." He said the agency is eager to see Canada resume its funding.

In addition to the U.S., the UN agency receives support from Britain, the European Union, Norway, Sweden and the Netherlands. Earlier this month, Saudi Arabia announced $59-million (U.S.) to repair homes and support schools and medical centres in Gaza, the West Bank and Jordan.

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In a statement Sunday, B'nai Brith Canada chief executive Michael Mostyn pointed to reports that Hamas hid rockets in UNRWA-supported schools during its recent war with Israel, and said the UN agency paid salaries of individuals who supported Hamas and promote "hatred, including the demonization of Jews and the glorification of jihad."

"Canadian aid for Arab Palestinian welfare must continue to be earmarked for specific humanitarian programs and peaceful infrastructure projects," Mr. Mostyn said, adding that such funding should "not open to diversion by the corrupt Hamas regime, well known for brutally violating the human rights of Arab Palestinians."

A spokeswoman for Global Affairs Canada said no decision has been made on the funding.

"Canada will continue to assess how best to provide its response to vulnerable Palestinians, based on needs, ability to deliver assistance effectively and available resources," spokeswoman Rachna Mishra said.

"The Government of Canada has not yet made decisions on the allocation of humanitarian support in response to recently released appeals for assistance in the West Bank and Gaza, and in Syria, Jordan and Lebanon," she added. "All options for providing assistance will be assessed in the decision-making process."

New Democratic Party MPs have urged the Liberal government to restore funding for UNRWA as part of the humanitarian support and effort to combat extremism in the Middle East. Support for schools would keep young Palestinians off the streets and reduce the likelihood of their recruitment by jihadis, NDP MP Hélène Laverdière said on Question Period.