Reversing a Biden administration position, President Trump’s Justice Department argued that a lawsuit could proceed in Manhattan that accuses a United Nations agency of providing more than $1 billion that helped to enable Hamas’s Oct. 7, 2023, attack on Israel.

The lawsuit says that the United Nations Relief and Works Agency allowed Hamas to siphon off the organization’s funds to help build a terrorist infrastructure that included tunneling equipment and weapons that supported the attack, in which about 1,200 people were killed and roughly 250 were taken hostage.

The Biden administration argued last year that UNRWA could not be sued because it was part of the United Nations, which enjoys immunity from such lawsuits.

But the Justice Department told a federal judge in Manhattan on Thursday that neither UNRWA nor the agency officials named in the lawsuit were entitled to immunity.

“The complaint in this case alleges atrocious conduct on the part of UNRWA and its officers,” the department wrote in a letter to Judge Analisa Torres of Federal District Court, adding, “The government believes they must answer these allegations in American courts.”

“The prior administration’s view that they do not was wrong,” the department said.

The letter was submitted by Yaakov M. Roth, a senior Justice Department official, and Jay Clayton, the interim U.S. attorney for the Southern District of New York.

UNRWA, a 75-year-old organization, has been a backbone of humanitarian aid delivery to the two million Palestinians in Gaza.

The U.S. government is not involved in the case against the agency, but the Justice Department, in instances in which it sees a federal interest, can make its views known in private lawsuits. The Trump administration has closely allied itself with the war aims of Prime Minister Benjamin Netanyahu of Israel, whose government has moved to ban the agency’s operations in its territory.

The suit, which seeks unspecified damages, was brought on behalf of about 100 Israeli plaintiffs, including survivors of the attack, the estates of some who were killed and at least one person who was held hostage by Hamas in Gaza. The suit says that UNRWA and current and former agency officials aided and abetted Hamas in building up its terror infrastructure and the personnel necessary to carry out the Oct. 7 attack.

That assistance included “knowingly providing Hamas with the U.S. dollars in cash that it needed to pay smugglers for weapons, explosives and other terror materiel,” the lawsuit says.

In the suit, the plaintiffs describe how they believe agency funds ended up with Hamas, the Islamist group that has controlled Gaza for nearly 20 years and pledged to erase the Jewish state. The United States has designated Hamas as a foreign terrorist organization.

The plaintiffs claim, for example, that UNRWA deliberately paid local employees U.S. dollars in cash and required them to turn to Hamas-affiliated money changers for the local currency they needed to make purchases inside Gaza. That process, the lawsuit says, “predictably” generated millions of dollars per month of additional income for Hamas.

Gavi Mairone, a human rights lawyer representing the plaintiffs, said that they welcomed the Justice Department’s letter to the judge, “clarifying that the United States stands with the plaintiffs, concurring with our arguments and legal analysis, that UNRWA and its senior managers are not above U.S. and international law.”

“No one has immunity for crimes against all humanity,” Mr. Mairone added.

Juliette Touma, a spokeswoman for the agency, said that it had seen the department’s letter, which she said had reversed the U.S. government’s “longstanding recognition that UNRWA is a subsidiary body of the General Assembly and an integral part of the United Nations, entitled to immunity from legal process under the 1946 Convention on the Privileges and Immunities of the United Nations.”

Ms. Touma added that UNRWA, through its lawyers, would continue to set out the basis for its position in the court.

Sheelagh McNeill contributed research.