The head of the main UN aid agency in the war-battered Gaza Strip warned late Saturday that its work is collapsing after nine countries decided to suspend funding over allegations that several agency employees participated in the deadly Hamas attack on Israel four months ago.

Philippe Lazzarini, head of the UN agency for Palestinian refugees, said he was shocked such decisions were taken as “famine looms” in the Israel-Hamas war. “Palestinians in Gaza did not need this additional collective punishment,” he wrote on X. “This stains all of us.”

His warning came a day after he announced he had fired and was investigating several agency employees over allegations that they participated in the Oct. 7 attack on Israel that sparked the war. The United States, which said 12 agency employees were under investigation, immediately suspended funding, followed by several other countries, including Britain, Germany and Italy.

The agency, with its 13,000 employees in Gaza, most of them Palestinians, is the main organization aiding Gaza's population amid the humanitarian disaster. More than 2 million of the territory's 2.3 million people depend on it for “sheer survival,” including food and shelter, Lazzarini said, warning this lifeline can “collapse any time now.”

The Israel-Hamas war has killed more than 26,000 Palestinians, according to local health officials, destroyed vast swaths of Gaza and displaced nearly 85% of the territory's people. The Hamas attack in southern Israel killed about 1,200 people, mostly civilians, and about 250 hostages were taken.

Meanwhile, two senior Biden administration officials said U.S. negotiators were making progress on a potential agreement under which Israel would pause military operations against Hamas for two months in exchange for the release of more than 100 hostages.

The officials, who requested anonymity to discuss the sensitive negotiations, said that emerging terms of the yet-to-be sealed deal would play out over two phases, with the remaining women, elderly and wounded hostages to be released by Hamas in a first 30-day phase. The emerging deal also calls for Israel to allow more humanitarian aid into Gaza.

CIA director Bill Burns is expected to discuss the contours of the emerging agreement when he meets Sunday in France with David Barnea, the head of Israel's Mossad intelligence agency, Qatari Prime Minister Mohammed bin Abdulrahman Al Thani, and Egyptian intelligence chief Abbas Kamel for talks centered on the hostage negotiations.

Despite the apparent progress, Israeli Prime Minister Benjamin Netanyahu reiterated in a televised news conference late Saturday that the war would continue until “complete victory,” including crushing Hamas.

He also doubled down on his previous criticism of Qatar, again accusing it of hosting Hamas leaders and funding the group. “If they position themselves as a mediator, so please, let them prove it and bring back the hostages, and in the meantime deliver the medicines to them,” he said.

Netanyahu also pushed back after the International Court of Justice ruled Friday that Israel must do its utmost to limit death and destruction in its Gaza offensive, declaring that “we decide and act according to what is required for our security.”

Among the first deaths reported since the ruling, three Palestinians were killed in an airstrike that Israel said targeted a Hamas commander.

Israel's military is under increasing scrutiny now that the top United Nations court has asked Israel for a compliance report in a month. The court's binding ruling stopped short of ordering a cease-fire, but its orders were in part a rebuke of Israel's conduct in its nearly 4-month war against Gaza's Hamas rulers.

At least 174 Palestinians were killed over the past day, the Health Ministry in Gaza said. It does not distinguish between combatants and civilians in its tolls, but has said about two-thirds are women and children.

Israel holds Hamas responsible for civilian casualties, saying the militants embed themselves in the local population. Israel says its air and ground offensive in Gaza has killed more than 9,000 militants.

Israel's military said it had conducted several “targeted raids on terror targets” in the southern city of Khan Younis in addition to the airstrike in nearby Rafah targeting a Hamas commander.

Bilal al-Siksik said his wife, a son and a daughter were killed in the Rafah strike, which came as they slept. He said the U.N. court ruling meant little since it did not stop the war.

“No one can speak in front of them (Israel). America with all its greatness and strength can do nothing," he said, standing beside the rubble and twisted metal of his home.

More than 1 million people have crammed into Rafah and the surrounding areas after Israel ordered civilians to seek refuge there. Designated evacuation areas have repeatedly come under airstrikes, with Israel saying it would go after militants as needed.

In Muwasi, a narrow coastal strip once designated as a safe zone but struck in recent days, displaced Palestinians tiptoed on sandaled feet through garbage-lined puddles in damp and chilly weather. Walls of sheets and tarps billowed in the wind. A mother wept after rain leaked in and soaked the blankets.

“This is our life. We have nothing and we left (our homes) with nothing,” said Bassam Bolbol, whose family ended up in Muwasi after leaving Khan Younis and finding no shelter in Rafah.

Frustration with the uncertainty grows. As thousands of Gazans fled Khan Younis toward Muwasi, Israel shared video showing a crowd appearing to call for bringing down Hamas.

The case brought by South Africa to the U.N. court alleged Israel is committing genocide against Gaza's people, which Israel vehemently denies. A final ruling is expected to take years.

The court ordered Israel to urgently get aid to Gaza, where the U.N. has said aid entering the territory remains well below the daily average of 500 trucks before the war. The U.N. also says access to central and northern Gaza has been decreasing because of "excessive delays" at checkpoints and heightened military activity.

The World Health Organization and the medical charity MSF issued urgent warnings about the largest health facility in Khan Younis, Nasser Hospital, saying remaining staff could barely function with supplies running out and intense fighting nearby.

WHO footage showed people in the crowded facility being treated on blood-smeared floors as frantic loved ones shouted and jostled. Cats scavenged on a mound of medical waste.

“These are the only painkillers left we have. If you want to count them, they are only for maybe five or four patients,” Dr. Muhammad Harara said.

The United States, Israel's closest ally, has increasingly called for restraint and for more humanitarian aid to be allowed into Gaza while supporting the offensive.

In Israel, protesters gathered in Tel Aviv and outside Netanyahu's residence in Jerusalem to call for new elections, frustrated with the government's failure to bring all hostages home. Israel also was marking International Holocaust Remembrance Day, alongside other countries around the world.