* UNRWA head says agency needs $80 million by end of 2010
* Says limited funds may affect host countries
By Dina Zayed and Marwa Awad
CAIRO, Sept 16 (Reuters) - The U.N. agency for Palestinian refugees called on Arab nations to give it more money on Thursday, saying a lack of funds was endangering its work supporting Palestinians scattered across their region.
Arab leaders regularly condemn Israel's occupation of Palestinian territories but give less than 5 percent of the funds the agency uses to alleviate one of the world's longest running refugee crises, according to the agency's figures.
The United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), which provides food, medical, educational and other assistance, says it is now cash-strapped.
"Arab donors -- we ask that ... you raise the level of your contributions to our core activities, especially health, education and poverty relief," UNRWA Commissioner General Filippo Grandi told Arab League foreign ministers gathered in Cairo.
"Increased support for UNRWA is a matter in which you, as political actors, share a major stake. We ask that your governments assume their appropriate place as financial supporters of UNRWA services," Grandi said.
Some 700,000 Palestinians fled or were expelled from their homes in the war that led to the founding of Israel in 1948. About 4.5 million refugees and their descendents now live in squalid camps in Lebanon, Syria, Jordan, the Gaza Strip and the occupied West Bank.
Their fate remains one of the thorniest issues in the conflict. Direct talks aimed at reaching a peace deal within a year began this month but deadlock over building in West Bank settlements has hindered progress.
Grandi said UNRWA's funding shortfall was the result of a growing refugee population and the global economic downturn, which had pushed many of the refugees deeper into poverty and left them more reliant on aid.
"Let me remind you that UNRWA is experiencing a serious financial crisis which threatens its ability to maintain services through the end of this year and into 2011," he said, adding that the agency needed $80 million until the end of 2010.
UNRWA's biggest contributors are Western governments, which provide the agency with some 95 percent of its funds. Saudi Arabia now chairs UNRWA's Advisory Commission, the first time an Arab donor holds the position.
"Without sufficient funds ... there may well be dire consequences that will adversely affect not only refugees, but also the communities and countries that host them," Grandi said. (Editing by Tom Pfeiffer and Elizabeth Fullerton)
Our Standards: The Thomson Reuters Trust Principles.