Charity Commission dismisses allegations by the BBC's Panorama
The commission concluded there was not enough evidence to support the allegations. Previous inquiries in 1996 and 2003 also found insufficient evidence to support alleged links between Interpal and Hamas.
The commission opened an inquiry into Interpal in December 2006 after an edition of Panorama in July 2006 alleged that many of Interpal's local partner organisations in the Occupied Palestinian Territories, through which much of the charity's spending is directed, promoted and supported Hamas.
Hamas is considered a terrorist organisation by many western governments.
The inquiry found that Interpal, which spent more than £1.5m of its £5m income in 2007 in the occupied territories, had kept clear financial audit trails for its dealings with its partner organisations. But it also concluded that Interpal's trustees had not properly monitored and investigated the allegations against them.
The commission cleared the charity's managing trustee, Essam Mustafa, of any links with terrorism, but ordered him to resign his position as the general secretary of the Union for Good group of organisations working in the occupied territories.
It also ordered Interpal to end its membership of the union. It said the charity's reputation could be damaged because the union's president supported violent Palestinian resistance. There was "potential for linkage", it said, between Interpal and other members of the union that were considered terrorist organisations.
Andrew Hind, chief executive of the commission, said charities working in high-risk situations required careful management by trustees.
"Even in these difficult areas, trustees must discharge their duty of care to ensure the charity's work is protected from abuse, and must avoid activities that might put charities' assets or reputations at risk," he said.