The Charity Commission has criticised the charity Interpal and ordered it to cut ties with an organisation headed by the radical cleric Sheikh Yusuf Al-Qaradawi.

After a two-year inquiry, the commission said that Interpal’s trustees had “not adequately fulfilled their duties and responsibilities” in monitoring where their money was spent, in a report published today.

The inquiry was launched in December 2006 following a BBC Panorama programme which reported allegations that some of the charity’s funds had gone to groups which promoted the ideology of Hamas.

Interpal raised more than £5million for Palestinian relief in 2007, with £1.5 million spent in the Occupied Territories.

The commission said there was insufficient evidence to support claims that any of its beneficiaries were promoting terrorist activities or ideology.

But it said that the charity “must dissociate itself” from an international group called Union for Good which has Dr Qaradawi as its president.

Interpal risked its reputation, the commission found, because of statements made by Dr Qaradawi that “promoted violence as a legitimate form of

resistance in support of the Palestinian cause”.

It also ruled that Interpal trustee Essam Mustafa would have to give up his post as general secretary of Union for Good if he wished to remain as trustee.

While it found no links between Dr Mustafa himself and terrorist activities, another member of the Union’s committee was “a designated terrorist person”, it noted.