Australia has suspended aid to support World Vision's work in the Palestinian Territories in the wake of allegations the charity's head in Gaza funnelled millions of dollars to militant group Hamas.
Manager Mohammad El Halaby is facing charges of diverting $US50 million ($A66 million) dollars to the group.
The Department of Foreign Affairs and Trade is investigating the "deeply troubling" matter.
"Any diversion of the generous support of the Australian and international community for military or terrorist purposes by Hamas is to be deplored and can only harm the Palestinian people," the spokesman told AAP on Friday.
"We are suspending the provision of further funding to World Vision for programs in the Palestinian Territories until the investigation is complete."
Australian had allocated World Vision $5 million over five years for agricultural projects and child trauma programs in Gaza.
World Vision Australia chief Tim Costello said the charity was shocked and puzzled by the charges.
"We have absolutely nothing to do with terror. We audit every cent that goes through," Rev Costello said.
"I want to reassure Australians that World Vision's money in Gaza is being spent on reducing poverty for Palestinian people, not terrorism."
Rev Costello said Mr El Halaby was a well-respected manager.
DFAT officials are urgently seeking more information from World Vision and Israeli authorities.
