Dozens of aid workers from major international NGOs have been unable to get work visas or faced delays in recent months, aid workers said.
Israel says the matter is procedural, but has not found a permanent solution to the issue in more than a year.
"This situation could escalate into crippled humanitarian operations," a senior aid worker cautioned.
Israeli officials strongly denied that the delay was intentional, with the Social Affairs Ministry calling any such suggestion a "false accusation".
Palestinians are heavily dependent on aid, with more than two-thirds in the Hamas-ruled Gaza Strip reliant upon it, according to the United Nations.
Much of it is delivered by international charities, which usually operate through Israel.
Since June, however, no new aid workers have been able to get a B1 work visa, the most common type for foreign NGO workers in the country.
This followed similar suspensions from August to December 2016 and from March to April this year.
Aid organizations claim dozens of aid workers have been affected so far, with a number stuck outside the country waiting for their visas to come through.
"They can't replace me"
Others are working illegally on tourist visas, but fear they could be expelled.
"A country director who is waiting outside the country for months means timely delivery of aid will be affected," the senior aid worker said.
Another aid worker who arrived in Israel in June said she waited two months to hear from the Ministry of Social Affairs to no avail.
In August, the aid worker travelled outside Israel and on her return she said authorities told her she had a month to sort out her situation or leave.
She expects to leave Israel in the coming days.
"They can't replace me, as any foreigner they bring in will have the same problem," she complained.
The head of the charity's operations in the West Bank is due to arrive in the coming weeks but is expected to face the same predicament.
Around 300 international NGO staff, including country heads, need B1 visas approved on a yearly basis, but to do so they need a letter of recommendation from the Ministry of Social Affairs.
Without such letters the Interior Ministry will not issue the visa, but the Ministry of Social Affairs has said it is no longer its responsibility and the Interior Ministry has said it could not issue new visas without the letters.
"Important work"
The Ministry of Social Affairs said the delays were due to "ongoing inter-ministerial considerations regarding the applications approval procedure."
"We believe the temporal delay will soon end, hopefully with minimal effect on the important work done by aid organizations and NGOs," it said in a statement.
Aid workers said, however, the problem began over a year ago and some expressed concerns the Israeli government is seeking to make their work harder.
The Ministry of Social Affairs said they "absolutely and completely deny this false accusation."
Previous delays were resolved when the ministry temporarily returned to the practice of delivering the letters.
Early this year, Israel passed a law allowing the Interior Ministry to ban entry to supporters of a movement boycotting Israel.
The senior aid worker suggested the Ministry of Social Affairs could be wary of giving recommendation letters as it does not have the ability to properly vet individuals.
Israeli officials have accused a number of aid workers of being biased towards the Palestinians and of being manipulated by the Islamist movement Hamas.
The Gaza head of the international Christian charity World Vision is on trial in Israel for allegedly providing support to Hamas, which is considered a terrorist organization by Israel, the United States and the European Union.
Rights groups also fear their work is being curtailed by the Israeli government, considered the most right-wing in the country's history.
In February, Israel refused a visa for the American country head of Human Rights Watch, accusing the group of being "fundamentally biased" towards the Palestinians.
After international condemnation, however, the Israeli government reversed position and granted the visa.