Palestinian Ma'an news agency reported on Sunday that Israel would revoke permits allowing the United Nations Relief and Works Agency UNRWA schools to operate starting next school year.
In October 2018, Nir Barakat, the former mayor of al-Quds, had said administration of schools, clinics and sports centers, among other services, would be transferred to Israeli authorities.
Sami Meshasha, the spokesperson for UNRWA, said in a press statement on Sunday that Israel was violating the 1946 Refugee Convention over its plan, Presstv reported.
"UNRWA's existence in Jerusalem (al-Quds) is not a gift from Israel," the spokesperson said, adding, "There are bilateral agreements binding on Israel to respect the agency's installations, jurisdiction and immunity in Jerusalem."
"In addition, Israel is a party to the 1946 Refugee Convention, and such attempts are in violation of this convention."
Hanan Ashrawi, a member of the executive committee of the Palestinian Liberation Organization (PLO), said in a statement carried by official Palestinian news agency Wafa that the Israeli decision was "a direct insult to the international community and disregard for its laws and decisions and institutions."
"This provocative step deliberately targets Palestinian refugees and their rights guaranteed by international and humanitarian law," Ashrawi said.
"It also targets Jerusalem and its institutions within the framework of the occupying state's strategy of Judaizing the Holy City, promoting the policy of ethnic cleansing, forced displacement, extending control over all aspects of life, and imposing new facts on the ground," she added.
UNRWA runs seven schools in two refugee camps in occupied East Jerusalem al-Quds, serving a total of 3,000 students.
The Israeli plan is the latest blow to the agency after the United States’ decision last year to halt its funding.
US President Donald Trump had already angered Palestinians by his December 2017 recognition of the disputed city of Jerusalem al-Quds as Israel's "capital" and cutting more than $200 million in bilateral aid for Gaza and the West Bank.
At that time, Palestinian President Mahmoud Abbas formally declared that Palestinians would no longer accept the US as a mediator to resolve the conflict because Washington was "completely biased" towards Tel Aviv.
Founded in 1948, UNRWA was established to deal with the mass displacement of Palestinians to Jordan, Lebanon and Egypt, following the establishment of the Israeli regime.
Since then, the descendants of those Palestinians who continue to be displaced have benefited from several UNRWA initiatives, including educational facilities.
According to UNRWA, the agency provides health clinics, schooling for 526,000 refugee children and food assistance to 1.7 million people, a million of whom living in Gaza.