The UK's Charity Commission has frozen the assets of a charity accused by the US of supporting militant Palestinian group Hamas.
According to the US Treasury, the London-based Palestinian Relief and Development Fund - known as Interpal - "has been a principal charity utilised to hide the flow of money to Hamas".
In a statement, the Charity Commission said the formal investigation it has opened was in response to the allegations of links to the "political/militant activities" of Hamas.
"We have taken this step in the best interests of the charity and its beneficiaries and to enable the charity to continue its charitable work under the supervision of the Commission," it said.
The charity will still have access to its money to fund its work, but only with the Commission's explicit approval, a spokesman told BBC News Online.
Interpal - which raises £2m-3m a year for relief efforts in Gaza, the West Bank, Lebanon and Jordan - will keep carrying out its projects despite the freeze, its chairman Ibrahim Hewitt told BBC News Online on Tuesday.
"We've been told this is for our own protection, so that any money going through can't be hijacked along the way," Mr Hewitt said.
"But I think it's very disappointing, given that the Charity Commission have been in regular touch with us very recently.
"We don't have anything to do with Hamas."
The decision amounted to "political interference" in the Commission's work, with Washington DC "calling the shots", he said.
Hamas operates both a political and military wing, and to date European Union countries have been at pains to block funds going to the military operations only.
Over much of the Occupied Territories, groups such as Hamas are key providers of health and education services.
But the US - encouraged by Israel following a deadly bus bombing claimed by Hamas - last week said it was banning five groups, four of them Europe-based, which funded Hamas's political and social activities.
They also acted as cover for terrorist financing, US Treasury officials said.
Accusations that Islamic non-governmental organisations are being used - often unwittingly - as conduits for terrorist financing are increasingly common in Washington DC.
The UK is now believed to be planning to push for its European partners to follow suit and ban Hamas - as well as other organisations such as Islamic Jihad - outright.
The issue is expected to be discussed by European Union foreign ministers at a meeting in Italy on 5 September.
Israel has been pressing for action against certain Palestinian charities for a long time, arguing that there is no distinction between political and military wings.
Israeli officials told News Online that documents found in a raid in Ramallah recently indicated that Interpal provided eight per cent of Hamas funds in the West Bank and Gaza.