More than 80% of Gaza's population relies on humanitarian assistance, with UN food aid going to about 1.1 million people. A high proportion of them are children.

Aid to 650,000 people would be halted, UNRWA spokesman Chris Gunness said.

The suspension would begin late on Monday, he said, when fuel supplies were expected to be completely exhausted.

He said both the Palestinians and Israelis had promised that UNRWA would receive the fuel it needs to maintain its deliveries, but none had arrived.

Rice visit

The UN was also forced to halt aid deliveries last month when fuel ran out.

Chronic fuel shortages in the Gaza Strip were hampered by a strike by Gaza's fuel distributors and petrol station owners.

But Israel also tightened fuel deliveries to the Nahal Oz terminal on the border after Palestinian militants killed two Israelis.

The Nahal Oz terminal and the Karni crossings - through which most food, fuel and humanitarian aid reaches Gaza - were closed by Israel on Sunday after a mortar attack, AFP news agency said.

Israel has said the crossings are being deliberately targeted by Hamas.

Israeli Prime Minister Ehud Olmert and Palestinian Authority President Mahmoud Abbas are to meet on Monday after meetings with US Secretary of State Condoleezza Rice.

She is in the Middle East to lay the ground for a trip by US President George W Bush to the region later this month.

The current peace process, launched at a Middle East conference hosted by Mr Bush in November, has been dogged by a lack of progress.

Ms Rice said she still believed a peace agreement between the Israelis and Palestinians was possible by the year's end, according to commitments made by both sides last year.