A total of 298 buildings were demolished and almost 3800 people made homeless last month in the biggest and most deadly occupation army offensive in the Gaza Strip since the September 2000 start of the Al-Aqsa Intifada, it said in a report.
"UNRWA estimates that even if no further demolitions occur in Rafah, and if all current or planned housing schemes are completed, 1691 of the families eligible for UN housing will remain homeless unless additional funding and land is available to re-house them," the report said.
Operation Rainbow was only the most recent in a string of raids in Rafah which the Israeli military has alleged are aimed at smashing a network of tunnels used to smuggle in weapons from under the border with Egypt.
"Re-housing a family costs approximately $20,000.
"If all the remaining homeless families were to be re-housed, the cost would be approximately $44.76m. UNRWA estimates the unfunded shortfall for re-housing eligible refugee families alone to be $35.05m."
The report also warned that space to re-house these families was rapidly running out.
But UNWRA later announced that its commissioner general Peter Hansen had reached agreement in talks on Thursday with Palestinian leader Yasir Arafat for two tracts of land to be provided to build 400 homes for the Rafah refugees.
"Re-housing a family costs approximately $20,000"
The UNWRA chief secured funding pledges from the United Arab Emirates' Red Crescent Society on Monday to build 400 replacement homes, although the exact amount of the donation has yet to be finalised.