Palestinian fuel distributors in the Gaza Strip agreed today to provide an emergency shipment to a UN aid agency that had warned it would have to halt food distribution unless its trucks received fuel.

UN food assistance to 650,000 Palestinian refugees had been scheduled to stop today due to fuel cuts, but Mahmoud al-Khuzundar, of the Association for Petrol Station Owners in the Gaza Strip, said 50,000 litres (13,209 gallons) of diesel would be delivered to the United Nations Relief and Works Agency (UNRWA).

The agency said it needed 7,000 litres a day for food distribution.

An Israeli official estimated that storage tanks on the Palestinian side of the Nahal Oz crossing, the only border terminal used to pump fuel to the Gaza Strip, contained about 1m litres of fuel. He accused Hamas of preventing its distribution.

For nearly three weeks, the fuel distributors have effectively been on strike in protest at Israeli cutbacks in supplies.

Last year, after Hamas seized full control of Gaza, Israel imposed an economic blockade, preventing exports and allowing in only limited supplies of food, fuel and aid.

Israel halted supplies of fuel for transport two weeks ago after Gazan militants attacked the Nahal Oz fuel crossing and killed two Israeli civilian workers.

John Ging, the UNRWA director of operations in Gaza, said yesterday there had been a "totally inadequate" supply of fuel from Israel to Gaza for 10 months until it was finally halted. "The devastating humanitarian impact is entirely predictable," he said.

Gaza's streets have largely been emptied of cars, except for those running on the last reserves of fuel, or on cooking gas or used vegetable oil.

On Tuesday, Gaza's central pharmacy ran out of fuel to refrigerate vaccines during the now regular power cuts. The main laundry at Shifa hospital, which washes sheets and uniforms for six hospitals and all government clinics, has less than a day's fuel left. "This is the first time in 40 years of operating that we've faced such a problem," said Samir el-Ankar, the laundry manager.

Around three-quarters of the 4,000 agricultural wells in Gaza depend on fuel-powered pumps. Fuel shortages have already drastically increased food prices. The value of a kilogram of tomatoes has risen from one shekel to six shekels in Gaza City.

"We remain committed to not allowing a humanitarian crisis in Gaza," said Mark Regev, a spokesman for the Israeli prime minister, Ehud Olmert. "But you cannot talk about the difficulties in delivering fuel to the Gaza Strip without stating and restating the fact that terrorists under the auspices of Hamas have deliberately targeted the fuel supply depot. It's almost as if their agenda is nihilistic."

Regev said there were problems with fuel distribution inside Gaza that meant Hamas maintained a supply of fuel for its military vehicles. All the fuel is paid for by the Palestinian Authority or the EU.