Speaking during a cabinet meeting on Sunday, Netanyahu said he told U.S. Ambassador to the U.N. Nikki Haley during a meeting last week "that the time has come for the UN to reconsider the continued existence on UNRWA."
Netanyahu accused the agency of "considerable incitement against Israel" because of its criticism of Israeli policies, and called for it to be integrated into the wider UN agency for refugees around the world.
UNRWA spokesperson Chris Gunness responded by saying UNRWA has a clear mandate set by the U.N.
"The situation of Palestine Refugees needs to be resolved as part of a political resolution of the conflict between Israelis and Palestinians. It is time for political action to resolve this long-standing crisis," he said.
The United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) was established in 1949 to work specifically with 5 million Palestinian refugees in the Middle East, providing basic services in refugee camps.
On Friday, UNRWA announced it had found a tunnel passing under two of its schools in the Gaza Strip and has complained to Hamas, the Palestinian faction in charge of the blockaded coastal enclave.
Israel accuses Hamas of building an extensive underground tunnel network to use for cross-border attacks against Israel and Netanyahu claimed Hamas was using children from the UNRWA school as "human shields."
Hamas, however, denied the tunnel's existence in a statement Friday, saying: "Our resistance policy completely respects UNRWA institutions and public institutions; meaning, we and other factions carry on with resistance activities far from residential areas and institutions."