"The Administration has carefully reviewed the issue and determined that the United States will not make additional contributions to UNRWA," the release said.
Washington will instead intensify dialogue with the United Nations and several stakeholders about "new approaches" for aiding Palestinian refugees that could include direct bilateral assistance from the United States along with other partners, the release added.
US media reported on Tuesday that Trump administration has decided to terminate financial support for the UNRWA. The US provides more than $350 million each year to UNRWA.
In January, the US State Department announced that it had frozen $65 million out of the planned $125 million for the UNRWA this year. The decision came after Trump said that Palestinians lacked the willingness to hold peace talks with Israel and had no respect for the United States, despite the financial aid it provided.
A Palestinian official responded to the funding cut, calling it a "flagrant assault" against the Palestinian people. He said the move only confirms that the US will not be a part of a solution to conflict in the region, Reuters reports.