Cowdenbeath and Kirkcaldy MP, Melanie Ward, has welcomed the launch of a Charity Commission investigation into charities accused of sending funds to Israeli settlements in the occupied West Bank.
Ms Ward said she submitted a formal complaint to the regulator in June after working with Israeli human-rights researchers.
Her complaint alleged that 32 charities in England and Wales had donated at least £28 million to Israeli settlements, which are considered illegal under international law.
The Charity Commission has now launched an inquiry, initially focusing on eight unnamed charities.
It will examine how much charitable funding may have gone to settlements, whether the spending was in line with the organisations' stated charitable aims and whether any regulatory action is required.
The regulator said the inquiry would initially establish the facts before deciding what action, if any, was needed. It also plans to extend the investigation to cover more charities over time.
The commission said it had not named the charities involved because there was no prior evidence of wrongdoing, citing potential risks to the safety and security of individuals, though it may name them when it publishes its findings.
Ms Ward said many of her constituents had shared her concern about the treatment of Palestinians in Gaza and the West Bank.
On Facebook, she said: "Funding Israeli settlements is not charitable activity; it is extremist activity.
"I know that many constituents share my horror at the situation for Palestinians in both the West Bank and Gaza."
The MP said there could also have been a taxpayer contribution through Gift Aid if donations had been claimed in the usual way.
She estimated that the tax relief connected to the alleged donations could total more than £5 million.
Ms Ward said the Government had made clear in response to questions she raised in the House of Commons that charity systems must not be used to support illegal settlements.
She added that the Charity Commission had told her it would publish new guidance aimed at preventing charitable funds from being used in this way in future.
She said: "This needs to happen fast."
Announcing the investigation, Stephen Roake, assistant director of high risk compliance at the Charity Commission, said: "All charities must be able to demonstrate that they are delivering on their charitable purposes, wherever in the world they operate and whatever they do.
"Serious allegations have been made about UK charities operating in illegal Israeli settlements in Palestine, so our first step is to establish the facts. Only then can we determine if regulatory action is required, based on our findings and the evidence we see.
"Our fact-finding will also help us develop regulatory guidance for charities, which will help ensure public trust and confidence in charities."
The regulator has also shared information about the scope of its inquiry with police and HMRC.
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