LONDON - Britain's charity watchdog is investigating new reports that a British-based charity group which the United States calls a terrorist organization has links with Palestinian militants, the commission said Thursday.

The Charity Commission said it is trying to ascertain whether Interpal, which says it provides relief and development aid to Palestinian refugees, is actually funneling funds to supporters of Hamas, which rejects the existence of Israel and refuses to renounce violence.

"The scope of the investigation will include concerns about the potential for indirect and inappropriate links between the charity and organizations and individuals who appear to support the militant or terrorist activities of Hamas and the connected duties and responsibilities of the trustees," the commission said in a statement.

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"We have not frozen the charity's assets and at this stage we do not intend to do so," the statement said.

In 2003, the U.S. government named Interpal a Specially Designated Global Terrorist, freezing its assets in the U.S. The charity has denied terrorist links.

The Charity Commission has investigated reported links between Interpal and terrorist groups on two previous occasions, but found no evidence.

In January, families of Americans killed or injured in Palestinian terrorist attacks filed a lawsuit accusing Britain's National Westminster Bank of maintaining an account for Interpal, alleging it funnels money to Hamas.

The Brooklyn, New York lawsuit alleges that the bank known as NatWest provides services for Interpal. The lawsuit is an amended version of one filed last year in federal court on behalf of Tzvi Weiss, an American student wounded in a 2003 bus bombing in Jerusalem.

According to its Web site, Interpal - which describes itself as nonpolitical - provides humanitarian aid mostly to Islamic charities in the West Bank and Gaza and in refugee camps in Jordan and Lebanon. The site gives a post bag address in northwest London.

The site says Interpal only works with "bona fide organizations" who are registered with the appropriate authorities.