Guterres told an ad hoc meeting of the General Assembly on voluntary contributions that UNRWA's situation was increasingly precarious given sweeping restrictions throughout occupied Palestinian territory that impeded its work, and the large cash shortfall.
The United Nations agency operates in Gaza, the West Bank, Lebanon, Jordan and Syria, providing aid, schooling, healthcare, social services and shelter to 2.6 million Palestinians.
The US was UNRWA's biggest donor, but cut funding in January 2024 after Israel accused about a dozen UNRWA staff of taking part in the deadly October 7, 2023, attack by Hamas militants that triggered the war in Gaza.
Sweden also cut its 2025 funding. Other big donors paused funding for UNRWA while the Hamas charges were investigated, but most have resumed their contributions.
Guterres said the agency's liquidity crisis jeopardised its ability to meet its mandate, which was renewed by the General Assembly six months ago with overwhelming member support.
"They cannot keep going like this without urgent backing and financial support from member states," Guterres said, noting that the agency had taken decisive steps to implement reforms and update its policy on outside and political activities following Israel's accusations.
"UNRWA is a stabilising force in an age of instability," he said, rejecting what he called continued efforts to undermine the agency through "disinformation, smear campaigns, legislative actions, operational restrictions, diplomatic roadblocks and more".
Such actions threatened the well-being of millions of Palestinians as well as UNRWA staff, Guterres said, noting that 390 UNRWA staff had been killed in Gaza since October 2023.
He noted that 1000 Palestinians had been killed in Israeli attacks since a ceasefire announced in October.
The UN said it fired nine UNRWA staff who may have been involved in the October 2023 attack, which killed about 1200 Israelis and foreign nationals.
A Hamas commander in Lebanon, killed in September by Israel, was also found to have had a UNRWA job. The UN has disputed links with Hamas and vowed to investigate all accusations.
UNRWA had reduced its service delivery hours by 20 per cent this year, cutting salaries for local personnel and keeping 15 per cent of international posts vacant, Guterres said, adding, "Any further cuts could push conditions past the breaking point".
UN spokesman Stephane Dujarric said the agency faced an existential crisis. He said the results of the ad hoc meeting on voluntary contributions would be announced on Wednesday.
In 2025, UNRWA received about $US887 million ($A1.3 billion) in pledges and $US829 million ($A1.2 billion) in contributions, according to its website, accounting for just 27 per cent of total funding needs of $US3.3 ($A4.8) billion.
