FILE PHOTO: A general view of Jerusalem shows the Dome of the Rock, located in Jerusalem's Old City on the compound known to Muslims as Noble Sanctuary and to Jews as Temple Mount December 6, 2017. REUTERS/Ronen Zvulun/File Photo

WASHINGTON (Reuters) - The United States has frozen $125 million in funding for a U.N. agency that provides aid to Palestinian refugees, Axios news site reported on Friday, but a State Department official said no decision had been made on the payment.

Days after President Donald Trump threatened to withhold future aid payments to Palestinians, Axios said the funding was frozen until the U.S. government finishes its review of aid to the Palestinian Authority.

The sum, a third of the annual U.S. donation to the United Nations Relief and Works Agency, was supposed to be delivered by Jan. 1, Axios said, citing three unidentified Western diplomats.

The State Department official, who spoke on condition of anonymity, said: “That (Axios) story is very misleading. Just because they were expecting the money on the first, and they did not get it at that time, does not mean it was suspended or canceled. Deliberations are ongoing, and we have until mid-January to make a final decision.”

Asked if any preliminary decision had been made, the official replied: “No. And reports to that effect are false.”

UNRWA spokesman Chris Gunness said the agency had not been “informed directly of a formal decision either way by the U.S. administration.”

Trump said on Tuesday he would withhold money from the Palestinians, accusing them of being “no longer willing to talk peace” with Israel.

“We pay HUNDRED OF MILLIONS OF DOLLARS a year and get no appreciation or respect. They don’t even want to negotiate a long overdue peace treaty with Israel ... with the Palestinians no longer willing to talk peace, why should we make any of these massive future payments to them?” Trump said on Twitter.

The United States is the largest donor to the agency, with a pledge of nearly $370 million as of 2016, according to UNRWA’s website.