Muslim Aid has said it is considering legal action against The Sunday Telegraph in response to what it calls “false allegations” about the charity’s financial dealings in an article at the weekend.

Last Sunday, the Telegraph reported that unnamed foreign security sources had claimed that Muslim Aid helped channel funds into organisations linked to Hamas.

Muslim Aid has called the allegations “baseless” and accused the newspaper of libel.

“We strongly rebut the baseless allegations made in the Sunday Telegraph in relation to our work through bona fide partners,” said a spokesman for Muslim Aid. “We regret that the newspaper has persisted with these libellous allegations.

“Muslim Aid is in communication with the Charity Commission and is also considering the position with its lawyers.

“In all its dealings Muslim Aid seeks to act ethically, transparently and fully in accordance with its legal and charitable obligations. We will not allow this kind of sensationalist and misleading journalism to deter us from pursuing our charitable objectives around the world.”

A Charity Commission spokeswoman said the regulator was aware of the allegations and was engaged with Muslim Aid and investigating the matter.

A spokeswoman for The Sunday Telegraph said the newspaper stands by its story, but has no further comment to make.