Australia will restore funding to the United Nations relief agency for Palestinians (Unrwa), weeks after the agency lost hundreds of millions of dollars in support following Israeli allegations that some of its Gaza-based staff participated in the 7 October attack.

The Associated Press (AP) reports that the Australian government also pledged on Friday to increase aid for Gaza, with foreign minister Penny Wong expressing horror at the deteriorating humanitarian situation in Gaza.

Australia’s move follows Sweden, the European Commission and Canada in reinstating funding for Unrwa, which had seen its international funding frozen while the allegations were investigated.

“The best available current advice from agencies and the Australian government lawyers is that Unrwa is not a terrorist organisation,” Wong told reporters Friday in Adelaide while she announced the aid package.

“[We have] been working with a group of donor countries and with Unrwa on the shared objective of ensuring the integrity of Unrwa’s operations, rebuilding confidence, and so importantly, ensuring aid flows to Gazans in desperate need.”

Australia, alongside 15 international partners, froze funding to Unrwa in January, leaving the agency – which employs roughly 13,000 people in Gaza and is the main supplier of food, water and shelter there – on the brink of financial collapse.

A small number of the agency’s staff were fired after the accusations.

Israel has claimed that 450 Unrwa employees were members of militant groups in Gaza, though it has provided no evidence.

Wong also pledged an additional $4m Australian ($2.6m/£2m) to Unicef to provide urgent services in Gaza, and a C17 Globemaster plane will also deliver defence force parachutes to help with the US led airdropping of humanitarian supplies into Gaza, which is on the brink of famine, says the UN.

Hamas has presented a Gaza ceasefire proposal to mediators and the US which includes the release of Israeli hostages in exchange for freedom for Palestinian prisoners, 100 of whom are serving life sentences, according to a proposal seen by news agency Reuters.

Hamas said the initial release of Israelis would include women, children, elderly, and ill hostages in exchange for the release of 700-1,000 Palestinian prisoners, according to the proposal. The release of Israeli “female recruits” is included.

The office of Israeli prime minister Benjamin Netanyahu said the new Hamas position was based on “unrealistic demands.”

Egypt and Qatar have been trying to narrow differences between Israel and Hamas over what a ceasefire should look like as a deepening humanitarian crisis has one quarter of the population in the battered Gaza Strip facing famine.

In February, Hamas received a draft proposal from Gaza truce talks in Paris which included a 40-day pause in all military operations and the exchange of Palestinian prisoners for Israeli hostages at a ratio of 10 to one – a similar ratio to the new ceasedfire proposal.

Israel also rejected that draft proposal, citing its long-held goal of not ending the war until it destroyed Hamas. Hamas insists an agreement should end the war.

According to the latest proposal, Hamas said it would agree on a date for a permanent ceasefire after the initial exchange of hostages and prisoners, and that a deadline for an Israeli withdrawal from Gaza would be agreed upon after the first stage, reports Reuters.

The group said all detainees from both sides would be released in a second stage of the plan.

Late on Thursday, Hamas said it presented to mediators a comprehensive vision of a truce based on stopping what it calls Israeli aggression against Palestinians in the Gaza Strip, providing relief and aid, the return of displaced Palestinians to their homes, and the withdrawal of Israeli forces.

It has just gone 9am in Gaza and Tel Aviv. This is our latest Guardian live blog on the Israel-Gaza war and the wider Middle East crisis.

Israel’s prime minister Benjamin Netanyahu has reacted to a fresh proposal presented by Hamas for a truce in the Israel-Gaza war, describing it as based on “unrealistic demands”.

It comes as Reuters reports on some of the details of the Hamas ceasefire proposal including the release of female hostages in return for Palestinian prisoners.

More on that in a moment but first, here’s a summary of the latest developments:

• Israeli prime minister Benjamin Netanyahu’s office said the new proposal presented by Hamas to mediators was still based on “unrealistic demands”. The statement said an update on the issue will be presented to the war cabinet and extended security cabinet on Friday, Reuters reports.

• Hamas said on Thursday it had presented to mediators a comprehensive vision of a truce deal. Reuters reports the deal is based on stopping the Israeli “aggression” against Palestinians in Gaza, providing relief and aid, the return of displaced people to their houses, and the withdrawal of Israeli forces.

• Hamas’ ceasefire proposal also includes a first stage of releasing Israeli women, children, elderly, and ill hostages in exchange for the release of 700-1,000 Palestinian prisoners, Reuters says. A hundred Palestinian prisoners serving life sentences in Israeli prisons would be released and the release of Israeli “female recruits”. Hamas said it would agree on a date for a permanent ceasefire after the initial exchange of hostages and prisoners, according to the proposal seen by Reuters. A deadline for an Israeli withdrawal from Gaza would also be agreed upon after the first stage. Hamas said all detainees from both sides would be released in a second stage of the plan.

• Australia is reinstating funding to the UNRWA aid agency amid growing concerns about the worsening humanitarian crisis in Gaza. The foreign minister, Penny Wong, announced the decision to unfreeze $6m (£5m) in emergency funding. The decision follows similar moves by Canada and Sweden.

• Israel has defended its policies on admitting trucks into Gaza, calling on the UN to send more convoys of aid to the north. “If the UN wants to see more aid in north Gaza, it should coordinate more convoys,” said Elad Goren, head of the civil department at COGAT, a defence ministry body governing civilian affairs in the occupied Palestinian territories. Goren also said 99% of aid trucks sent to Gaza were “approved”, pushing back on reports by the UN and NGOs that cumbersome Israeli inspections are blocking food and other essentials.

• The US has circulated the final draft of a UN security council resolution late on Thursday that would support international efforts to establish “an immediate and sustained ceasefire” in the Israel-Gaza war as part of a deal to release hostages, the Associated Press (AP) reports. No time has been set for a vote, and the draft, obtained by the AP, could still be changed. The US circulated the initial draft on 19 February a day before it vetoed a widely supported Arab-backed resolution demanding an immediate humanitarian ceasefire, saying it would interfere with negotiations on a deal to free the hostages.

• Chuck Schumer, the US Senate leader and a top ally of Joe Biden, on Thursday broke with Israeli prime minister Benjamin Netanyahu over his handling of the invasion of Gaza and called for Israel to hold new elections, in comments that upset its ruling party and allies on Capitol Hill.

• The US on Thursday imposed sanctions on three Israeli settlers and two Israeli settler outposts in the occupied West Bank. It marks the first time the US has imposed sanctions on entire outposts rather than on individuals. Israel has occupied the West Bank and East Jerusalem since 1967.

• The charity sending food aid to Gaza on a ship travelling across the Mediterranean from Cyprus is loading a second boat with supplies, which it hopes will set off in the coming days. Pallets containing 300 tonnes of food aid – 50% more than the first shipment – are expected to be screened and loaded by the end of Thursday, but there is no indication yet when it will leave the port of Larnaca. Arvind Das of the International Rescue Committee said the aid en route via water was “a drop in the ocean looking at the need”.

• 31,341 people have been killed by the Israeli military offensive in Gaza since 7 October according to the Hamas-led health ministry in the territory. It added that 73,134 people have been wounded. It has not been possible for journalists to independently verify the casualty figures issued during the conflict.

• Israel’s military has claimed to be “continuing to operate in Khan Younis, conducting targeted raids on terror targets and eliminating terrorists”. It says it targeted fighters who had attempted to launch a rocket into Israel, and destroyed rocket launchers in the Hamad area.

• A man in his 50s has been critically injured during a stabbing attack in Beit Kama shopping complex in Israel.

• Relatives of some of those believed to still be held in Gaza by Hamas staged a demonstration in Tel Aviv on Thursday, temporarily blocking a highway. About 40 relatives blocked the road, while holding banners saying “We want them alive, not in coffins” and carrying large pictures of female hostages.

• Israel’s military has said it struck what it called “Hezbollah terrorist infrastructure” inside Lebanon on Thursday morning. It also said it intercepted a “suspicious aerial target” heading into Israel.

• The Palestine Red Crescent Society has accused Israeli security forces of preventing ambulances reaching sick or wounded people 95 times in the Israeli-occupied West Bank since 7 October. It says that they have “endangered lives in violation of international humanitarian law”.

• Palestinian president Mahmoud Abbas has appointed Mohammed Mustafa, a long-trusted adviser on economic affairs, as prime minister, the official Wafa news agency said on Thursday. Mustafa’s appointment comes less than three weeks after his predecessor, Mohammed Shtayyeh, resigned, citing the need for change after the Hamas attack of 7 October triggered war with Israel in Gaza.

• The US and UK have called for a UN maritime inspectorate to do more to prevent Iranian missiles reaching Houthi-controlled ports in the west of Yemen.

• The leader of Yemen’s Houthis, Abdul Malik al-Houthi, said on Thursday the group’s operations targeting vessels will escalate to prevent Israel-linked ships from passing through the Indian Ocean towards the Cape of Good Hope.

• The US military said on Thursday that Houthis fired two anti-ship ballistic missiles from Yemen toward the Gulf of Aden and two missiles toward the Red Sea, but there were no injuries or damage reported to US or coalition ships. The US military’s central command said it destroyed nine anti-ship missiles and two drones in Houthi-controlled areas of Yemen.

• The UN special envoy for Yemen has told the UN security council, the longer the war in Gaza goes on and Yemen’s Houthi rebels keep attacking ships in the Red Sea the greater the risk that Yemen could be propelled back into war. Hans Grundberg said it has been impossible to shield his promising efforts to restore peace to Yemen because the reality is, “what happens regionally impacts Yemen – and what happens in Yemen can impact the region”.