The Australian government said Friday its review found no evidence that any of its aid to the Christian charity group World Vision was diverted to the Hamas movement.
In August, Israel's internal security agency accused the director of the Gaza branch of World Vision, Mohammed el-Halabi, of funnelling 50 million dollars to Hamas to help build tunnels and purchase weapons.
Australia and Germany suspended funding after the allegations.
The case is still in an Israeli court and El-Halabi has pleaded not guilty to all charges.
"The Israeli court case will determine World Vision employee Mr El-Halabi’s innocence or guilt," a spokesperson for the Department of Foreign Affairs and Trade said on Friday.
The department had "conducted a review of its aid management and found nothing to indicate we have any awareness of Mr El-Halabi’s alleged wrongdoing," the spokesperson said.
"Australian aid funding to World Vision will remain suspended until we consider the outcomes of these processes."
World Vision Australia welcomed the government's findings. The aid agency has commissioned its own independent review which are ongoing.
Australia was the biggest single donor to World Vision Gaza work, which is suspended until the outcome of the internal audits.
"We remain deeply concerned with this situation, and are saddened by the impact on Gaza’s children and their families," a World Vision spokesperson said Friday.
"Aid from the international community remains a lifeline for 1.1 million people in Gaza, and one in four children in Gaza are in need of psycho-social support."
Since the World Vision incident, Israel has accused members of two other organizations of helping Hamas, including an engineer with a UN United Nations development project and a coordinator for a Turkish government-run humanitarian agency.
Hamas has criticized the allegations as an attempt to scare off aid groups from providing humanitarian assistance to residents in Gaza, which has been under a tight Israeli blockade since Hamas' violent seizure of power in 2007.