Palestinian mourners walk past the Israeli settlement of Carmel, background, while they carry the body of Suleiman Hathaleen, 69, during his funeral in the West Bank Bedouin village of Um el-Kheir, south of Hebron, Tuesday, Jan. 18, 2022. AP
It is the latest in a series of warnings from UNRWA on possible deep cuts if the international community fails to provide more support.
"Chronic agency budget shortfalls threaten the livelihoods and well-being of the Palestine refugees that UNRWA serves and pose a serious threat to the agency's ability to maintain services," agency head Philippe Lazzarini said in a statement.
UNRWA's funding suffered a blow in 2018 when former US president Donald Trump cut support to the agency.
His administration branded UNRWA as "irredeemably flawed," siding with Israeli criticisms of the agency founded in 1949, a year after Israel's creation.
President Joe Biden's administration has restored some support, but UNRWA has said it is still struggling.
In November, it warned it was facing an "existential threat" over budget gaps.
The agency has a staff of 28,000 and provides services such as education and health care to more than five million Palestinians registered in the Palestinian territories, including Israeli-annexed east Jerusalem, Jordan, Lebanon and Syria.