The UN Special Coordinator for the Middle East peace process (UNSCO) will not send staff to Gaza until further notice, the source close to the organisation told AFP on condition of anonymity, after Hamas imposed tough new restrictions following the assassination of one of its members.
The decision was made, the source added, as frustration grows at the negative impact of the restrictions for aid work and Gazan citizens.
UNSCO is the key UN agency working on the currently stagnant Palestinian-Israeli peace process, and the restrictions will apply to its head, UN envoy for the Middle East Nickolay Mladenov.
In previous conflicts between Hamas and Israel UNSCO helped to negotiate ceasefires, and Mladenov reports regularly to the UN Security Council.
Hamas, which runs the Gaza Strip, shut the Erez crossing into Israel on Sunday after blaming the Jewish state for assassinating senior military figure Mazen Faqha, 38, near his home last Friday.
Erez is the only crossing for people, although a separate route is available for goods.
On Monday, they reopened Erez for those entering Gaza, but men between 18 and 45 are still largely prevented from leaving the enclave of two million people.
Reports said Hamas was looking for the assassins, believing they are still in Gaza, but the knock-on effects have been significant.
Around half a dozen international aid workers have been prevented from leaving in recent days, a senior humanitarian source said.
More than two thirds of Gazans are dependent on aid, according to the United Nations.
On Thursday, a coalition of more than 100 Palestinian NGOs and rights groups called on Hamas to reopen the crossing.
"Security goals should not come at the expense of human rights," the Palestinian NGOs Network said in a statement.
Israel has maintained a blockade on Gaza for a decade, largely restricting residents from entering.
However, Israel grants hundreds of permits for medical, educational, business and other reasons per week.
Hamas has fought three wars with Israel since 2008.
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