A German organisation which compensates survivors of Nazi labour camps has withdrawn funding for a Israeli NGO for its support of the Palestinian right of return.

The foundation - the Memory, Responsibility and Future Fund (EVZ) - said it would no longer support the educational work of Zochrot, a Tel-Aviv based NGO that also promotes the interpretation of the establishment of Israel as a "Naqba", or "disaster".

Gunter Saathoff, a director of EVZ, told Ha'aretz that they could not fund groups with a political agenda.  

The decision, which followed pressure from pro-Israel watchdog NGO Monitor, was reportedly effective at the end of 2011.

Eitan Bronstein, public outreach director for Zochrot, said that they had a two-year contract with EVZ for 20,000 euros per year, for 2011 and 2012. He noted: "All Zochrot positions and activities were clear to EVZ since the beginning of our partnership."

Gerald Steinberg, president of NGO Monitor, called the decision a "victory in the battle to hold funders accountable for their support of NGOs involved in the demonisation" of Israel.