Yunis al Masri was luckier than his two brothers in Gaza. Although the truck that ploughed into their car as they travelled to work in Israel 24 years ago killed Jaber and Kamal instantly, Mr al Masri survived with shattered bones, internal bleeding and brain damage.

Today, aged 49 and after many operations, he has difficulty walking and problems remembering to do things. Any hope of working again was crushed in 1985 amid the car wreckage.

Like tens of thousands of other Palestinian manual labourers who worked inside Israel before Gaza was progressively sealed off to the outside world from the early 1990s, Mr Al Masri had paid regularly into Israel’s social security fund from his salary. Certified as disabled by an Israeli medical committee, he is entitled to a monthly allowance of US$800 (Dh2,900) from Israel’s National Insurance Institute, out of which he has supported his wife and 10 children in their home in Beit Hanoun, in northern Gaza.

In early January, however, the transfers of disability benefits stopped arriving in his bank account in Gaza. About 700 other injured workers are in the same situation.

The reason, they have learnt, is that while the Israeli army was rampaging through the Gaza Strip during its winter assault, the Bank of Israel severed ties with Gaza’s banks.

The ending of financial relations between Israel and Gaza, in a deepening of the three-year blockade of the Hamas-ruled enclave, means Mr al Masri and other disabled workers have been without a source of income for the past nine months.

Mr al Masri said he had been forced heavily into debt to keep putting food on the table, adding that the whole family was now dependent on his daughter, Nura, 26. During Ramadan she started part-time secretarial work that brings in $100 a month, though the job is far from secure. “How far will that money go to feed and support a family of 12?” he said.

Nura added: “When the benefits first stopped arriving, we called the National Insurance Institute and were told it’s a political decision and that when Gilad Shalit was returned we would get our money.” Sgt Shalit, an Israeli soldier, was captured by Hamas in June 2006. It is believed he is being held in Gaza.

Mr al Masri’s sister-in-law, Hasna, who lost her husband, Jaber, in the crash, said none of her four children were earning any money and the family was without any source of income. She had recently told her eldest son, who is studying in Romania, that there was no money left for his course fees.

“We are happy go to the checkpoint at Erez to pick up the cheque in person if that is what it takes,” Mr al Masri said.

The workers’ cases have been taken up by the Al Mezan centre for human rights, based in Gaza, and by an Israeli legal group, Adalah, which launched a petition against the government’s decision in the Supreme Court last week.

Mahmoud abu Rahma, a spokesman for Al Mezan, said the 700 injured workers had been part of a large workforce of as many as 80,000 Gazans who regularly worked in Israel during the 1970s and 1980s. The numbers only began to dwindle in the early 1990s as Israel introduced a closure policy and built an electronic fence around Gaza. The Oslo accords of the 1990s, which held out the hope of Palestinian self-rule, further reduced the opportunities for work as Israel entrenched its policy of separation.

Much of the manual labour, once done by Palestinians from Gaza and the West Bank, is today performed by 300,000 guest workers, mainly from the Philippines, Thailand, China and eastern Europe.

Mr Abu Rahma said the disabled workers, having lost the chance to work, were now suffering the indignity of not being able to provide for their families.

“Israel has absolute control not only over the physical borders of Gaza, but also over our monetary system, too,” he said. “We depend on the Israeli currency of the shekel and Israel’s banks can turn on and off the money supply at will.”

Israel’s blockade of Gaza has been progressively tightened since Hamas won the Palestinian Authority elections in early 2006. Following the Islamic movement’s rout of an attempted coup by the rival Fatah group in summer 2007, Israel declared Gaza an “enemy entity” and started cutting off fuel and power supplies. Now only the most essential items get through.

The only two Israeli banks dealing with Gaza, Hapoalim and Discount, received approval from the Bank of Israel to cut their links during the assault on Gaza. The central bank had previously opposed such a move, fearing that it would bring about the collapse of Gaza’s economy.

This week, a report from the United Nations Conference on Trade and Development noted that 90 per cent of Gaza’s population was living below the poverty line, with employment restricted almost entirely to government and public administration and small service industries.

Mr Abu Rahma said the disabled workers included the poorest and most vulnerable among Gaza’s population of 1.5 million, and many were in danger of starvation if payments were not resumed soon. “They have no other sources of income and are really struggling without their benefits.”

In 1998, Fadil Qomsan fell seven storeys from a building site in Ashdod, 25km north of Gaza, breaking his back.

During the two weeks he spent in a hospital in Tel Aviv, he said, the site’s manager came to his bedside to tell him that the construction company was denying responsibility. “He told me that I had fallen because I was using drugs. The police organised many blood tests during my stay, but they all came back negative. Eventually I won my right to disability allowance.”

Mr Qomsan, 46, from Jabaliya camp, who needs a back brace to walk, has been assessed as 81 per cent disabled. He was receiving $450 to support his wife and three children, the youngest of whom is seven. “Our financial situation was desperate even when we were getting the cheques, but now it’s beyond miserable.”

He said the family had been forced to survive on the charity of family and friends.

Taysir al Basoos has been blind since 16 when a nail fired from a nail gun on a building site in Ashkelon, 10km north of Gaza, penetrated his chest, severed the blood flow to his brain and left him blind.

Mr Al Basoos, 47, said his wife and six children, including the youngest who is five, were entirely dependent on his monthly disability benefits.

“Workers like me helped to build the state of Israel; we did not put Hamas in charge of Gaza,” he said. “I am not politically active at all, so why am I being punished? Our case is a humanitarian one.”

Sawsan Zaher, a lawyer with Adalah, said six representative cases of disabled workers from Gaza who were denied benefits have been presented to the Israeli Supreme Court. They included construction workers who fell; a gardener for a local council who was crushed by a falling crane, and a car wash operator who lost two fingers.

Ms Zaher said Adalah had first approached the National Insurance Institute, the Bank of Israel and various government ministries in April, when the change in policy became clear, but they had all shirked responsibility.

“We were told by the NII that it was trying to negotiate a solution with the Palestinian Authority, possibly by transferring the money through the [Fatah-run] West Bank, but it led nowhere.”

Adalah argues that the decision to block the payments to Gaza violates Israeli law. “The money is the property of the disabled workers and this decision unjustly deprives them of their property,” Ms Zaher said.

Adalah is also claiming that the decision, because it affects the welfare entitlements of Palestinian workers only and not of Israelis, constitutes racism.

Mr Abu Rahma said there was an additional concern that some of the workers could not afford essential medicines needed in their treatment.

Sharif Qarmout, 58, of Jabaliya camp, has been paralysed from the waist since 1979 when he fell six storeys from a building site in Rishon Letzion, near Tel Aviv. The loss of his monthly allowance of $1,150 has plunged the family into great hardship as they struggle not only to buy food but also to pay the $350 bill each month for the 15 different drugs he needs to control his incontinence, improve blood circulation in his legs and prevent depression.

“A year and a half ago Israel stopped giving my wife permission to go to the hospital in Ashkelon to collect the medicines,” said Mr Qarmout, who uses a wheelchair. “I was forced to buy them privately in Gaza, but now I don’t have the money. I’ve been using different pharmacies, paying on credit, but it can’t go on much longer. I’ve started reducing the doses to make the drugs last longer.”

Mr Qarmout said his three grown children were living in the house to care for him, as his wife was mostly confined to bed with severe back problems from 30 years of lifting him.

“No one is taking responsibility for people like me – not Hamas, not Israel.”

Marie Badarne, of the Labourers’ Voice, a workers’ rights group based in Nazareth, said the Israeli government’s abuse of the disabled workers echoed a much wider problem faced by Gazans who had been employed in Israel until recently.

She said thousands of workers from Gaza had their contracts in Israel terminated without notice by employers in spring 2004, shortly after the government of Ariel Sharon announced it would be “disengaging” from the enclave in summer 2005.

Most had been working in construction, garages, textile factories, carpentry workshops or as agricultural labourers inside Israel or in a handful of Jewish settlements inside Gaza that were dismantled in August 2005.

“Overnight more than 20,000 workers had their work permits withdrawn and lost their livelihoods,” she said. “They had been paying into the social security system, some of them for decades, but have been denied their legal entitlements, such as severance pay, overtime and holiday allowance.”

The Labourers’ Voice said its investigations had also shown that most Israeli employers had been paying Gaza’s workers below the minimum wage.

According to its calculations, the laid-off workers from Gaza are each typically owed between $12,000 and $50,000, meaning that Israeli employers have “defrauded the workforce of tens, if not hundreds, of millions of dollars”, Ms Badarne said.

In July, the Nazareth group submitted claims on behalf of more than 40 workers to the labour court in Beersheva, which has agreed to hear the cases. All the workers were employed by a furniture company, mostly as carpenters, at the Erez industrial estate close to the Gaza Strip.

Ms Badarne said the company did not deny that the workers were owed money but had defended its actions on the grounds that Gaza had been declared an “enemy entity”.

“Their lawyers have said that, because Gaza is an enemy entity, the residents should be treated as a hostile population,” she said. “They told the judge that Israel must not open its doors to terrorists and that ending the economic siege would work against the interests of the Israeli state.

“In an attempt to bolster their argument that the case in support of the workers should be dismissed, the lawyers even sent the court a copy of the Hamas charter and an analysis of what it means.”

She added that, despite the fact that Israeli employers made social security deductions from Gazans’ salaries, the workers could no longer make use of the benefits they should be entitled to.

“If they get sick, for example, these workers should have the right to use Israeli hospitals because they paid health insurance, but of course that obligation is no longer being honoured. In some cases, given the deteriorating provision of health care in Gaza under the blockade, that right could mean the difference between life and death.”

Ronit Gedultir, a spokeswoman for Israel’s National Insurance Institute, said officials were seeking a solution for the disabled workers’ families affected by the bank’s decision.

“This is a very delicate issue and we are not neglecting it,” she said. “The money is waiting here for the families, but so far we have found no way to deliver it to them.”

Israel has also been seeking to end the right of Palestinian civilians to seek compensation for injuries they have suffered at the hands of the Israeli army.

A bill that exempted the state from legal claims by Palestinians for personal injury or damage to property inflicted by the army during the second intifada was passed in summer 2005 but overturned a year later by the Supreme Court.

Hassan Jabareen, the director of Adalah, said the law had recently been amended in an attempt to bypass the court and was expected to be resubmitted to the parliament this month.