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An Australian government probe has found no evidence that taxpayer money was misused by the World Vision NGO in Gaza, after Israel alleged millions of dollars were diverted to Hamas.

In August 2016, Israel accused World Vision's Gaza head Mohammed al-Halabi of siphoning off millions of dollars per year to the terror group which rules the coastal enclave.

However, the NGO said it had seen no evidence of Israel’s claims. Halabi has pleaded not guilty to all charges against him.

Australia immediately suspended its funding for World Vision’s Gaza programs after Halabi was charged, with the Department of Foreign Affairs and Trade (DFAT) announcing a review.

"The review uncovered nothing to suggest any diversion of government funds," DFAT said in a statement sent to AFP on Tuesday.

Halabi's court case is ongoing but his lawyers have accused the prosecution of refusing to hand over much of the evidence.

World Vision itself is also conducting an independent review of its operations to determine whether any graft occurred. The NGO cut jobs and halted projects in Gaza following Halabi’s arrest.

DFAT said funding to World Vision's programs would remain frozen pending the result of the probe and Halabi's trial.

Tim Costello, chief advocate for World Vision Australia, said he was "very pleased and very relieved" at the findings.

"Our own ongoing audit has not uncovered any diversion of funds," he told AFP, though he stressed it would not be finalized until the summer.

"For DFAT to say there was no diversion of funds is very welcome."

A spokesman for Israel's foreign ministry declined to comment, saying it preferred to allow the trial to play out.

In a separate case, a Palestinian Arab UN worker accused by Israel of aiding Hamas was recently sentenced to seven months in jail as part of a plea bargain.

Waheed Borsh, an employee of the United Nations Development Program (UNDP), was suspected of having been instructed by a senior Hamas official to conduct his work in the UNDP in such a way as to enable Hamas to gain the maximum benefit from it.