Trocaire, the official overseas development agency of the Catholic Church, has been accused of mounting a biased and partisan political campaign against Israel.
" Trocaire is waging this campaign against Israel. I believe it is biased and partisan," Mr Flanagan said.
He added: "I hope every family, whose children brings home a Trocaire box for the mantlepiece, should be aware of the true nature of Trocaire's campaign in the Middle East."
Last month Trocaire executive director Justin Kilcullen wrote about Irish and EU policy towards the settlements.
"The Israeli settlements in the West Bank have been built on occupied land. Their existence has been repeatedly deemed illegal by the UN and the International Court of Justice. But Irish and EU policy towards the Israeli settlements defies logic. We consider them illegal -- yet we economically support them."
Mr Flanagan says Trocaire has overstepped its mandate as a development agency.
"I am very concerned about their stance and their political bias. Trocaire is an official organisation linked to Irish Aid -- the State's programme of assistance to developing countries. It is a major recipient of taxpayers' money through Irish Aid.
"They are currently calling for a boycott of Israeli products and calling for a ban on trade with those producing goods on the West Bank and have called for a ban on what they described as 'illegal goods'. It is my belief they are now engaged in a very partisan political campaign that is beyond their remit."
Trocaire was set up in 1973 "to express the concern of the Irish Catholic Church for the suffering of the world's poorest people" and has always been involved in advocacy work, as well as charity work. Its website states: "Trocaire envisages a just and peaceful world where people's dignity is ensured and rights are respected; where those in power act for the common good."
Trocaire executive director Justin Kilcullen has consistently attacked the Israeli occupation of the West Bank.