AMMAN (Reuters) - Jordan said on Saturday it regretted a U.S. decision to halt funding to a United Nations agency for Palestinian refugees, saying it would only fuel radicalism and harm prospects for Middle East peace.

FILE PHOTO: Jordanian Foreign Minister Ayman Safadi addresses the press in Amman, Jordan, July 2, 2018. REUTERS/Muhammad Hamed

Foreign Minster Ayman Safadi told Reuters his country, which hosts more than 2 million of the over 5 million registered refugees whom the agency supports, would continue to rally donor support to ease the acute financial crunch faced by the agency.

The U.S. announced on Friday it would no longer support the United Nations Relief and Works Agency (UNRWA). Earlier this year the United States, long its biggest donor, had slashed funding.

“Disruption of UNRWA services will have extremely dangerous humanitarian, political and security implications for refugees and for the whole region,” Safadi said.

“It will only consolidate an environment of despair that would ultimately create fertile grounds for further tension. Politically it will also further hurt the credibility of peacemaking efforts.”

Safadi said a meeting on Sept. 27 in New York in the United Nations which the kingdom was co-sponsoring with Japan, the European Union, Sweden and Turkey would seek to “rally political and financial support for the agency”.

“We will do everything possible to ensure that UNRWA gets the funds it needs to continue offering its services to Palestinian refugees,” Safadi added.

Staunch U.S. ally Jordan lies at the heart of the Arab-Israeli conflict with many of its citizens refugees or descendants of the roughly 700,000 Palestinians who were driven out of their homes or fled the fighting in the 1948 war that led to Israel’s creation.

Diplomats say the U.S. decision has stirred fears of a new Middle East policy under U.S. President Donald Trump’s administration that seeks to dilute and eventually strike out the right of return for millions of Palestinian refugees.

Safadi said the international community’s support for the agency was inseparable from future talks on the fate of refugees - among the most sensitive issues in the Arab-Israeli conflict.

The issue was agreed to be among final status talks that were stalled in 2014 ultimately over whether Israel would make territorial concessions in return for a lasting peace deal with the Arabs.

“The status of refugees is not determined by any one single country, it is determined under international law and as such no country can take away that status,” Safadi said.