Christian aid group World Vision has suspended its operation in the Gaza Strip amid allegations by Israel that the agency's operations manager in the territory diverted funds to the Islamist group Hamas.

Key points: World Vision says bank accounts in Jerusalem frozen by Israeli authorities

World Vision says bank accounts in Jerusalem frozen by Israeli authorities Charity says it is living through a big crisis, funding is affected

Charity says it is living through a big crisis, funding is affected Spokesman would not confirm contractors have been laid off

In an August 29 letter, handed to contractors at a meeting in Gaza, the NGO said its bank accounts in Jerusalem had been frozen by Israeli authorities and it was no longer able to transfer money to Gaza, making it impossible to pay them.

The letter said World Vision was living through a big crisis and its sources of funding had been affected. It was written in Arabic and a copy was sent to the Reuters news agency.

"Because of the crisis, we have frozen all our activities in Gaza. Our bank accounts in Jerusalem were frozen by the [Israeli] authorities, which also prevented us from making any transfers to Gaza," it said.

"Because of these conditions that are beyond the control of World Vision, we will not be able to keep your job at the present stage because we will not be able to transfer any salaries or any other payments."

A spokesman for World Vision would not confirm the contractors had been laid off, saying only the agency's operations in Gaza had been suspended following the accusations against the operations manager Mohammad El Halabi.

"We are conducting a full review, including an externally conducted forensic audit," the organisation said.

Israel arrested Mr Halabi in June and last month accused him of funnelling tens of millions of dollars to Hamas — the Islamist militant group that has controlled the territory since 2007.

Mr Halabi has denied any wrongdoing via his lawyer. He has been charged and has appeared at a pre-trial hearing held in secret.

While on a two-day visit to Israel this week, Foreign Minister Julie Bishop discussed the case with Israeli Prime Minister Benjamin Netanyahu, describing it as "deeply concerning".

Sorry, this video has expired Julie Bishop invites Israeli PM to Australia during Jerusalem visit

World Vision and Amnesty International have called on Israel to ensure he receives a fair and transparent trial.

'Situation out of World Vision's control'

Israeli officials accuse Mr Halabi of siphoning off more than $9.25 million a year since 2010 to pay Hamas fighters, buy arms, pay for the group's activities and build fortifications.

World Vision has disputed the allegations, saying in a statement on August 8 that its total operating budget in Gaza over the past 10 years was around $29.72 million, making the alleged diversion of nearly $66.04 million "hard to reconcile".

Some foreign diplomats have expressed concern at Israel's presentation of the case and sought clearer evidence for the numbers. Since the allegations emerged, however, Australia has suspended funding to the aid group.

One of the suspended contractors told the Reuters news agency that World Vision had emphasised the situation was out of its control.

"They said it was about the freezing of transfers and nothing else, when we asked them if that had to do with Halabi's case," he said, asking not to be named because he did not want to jeopardise the payment of funds he is still awaiting.

The termination letter informed contractors World Vision was looking at ways to pay all amounts owed to them through legal channels and "we hope this happens in the near future".

The statement asked signatories to hand over belongings that they had received from the aid group including mobile phones, work identity cards and computers.

Reuters/ABC