Barclays Bank has agreed to continue providing banking services - pending a legal challenge - that allow thousands of Somalis living in the East End to send cash home.

A campaign led by Bethnal Green and Bow MP Rushanara Ali was launched when the bank announced plans to close the accounts of four money transfer and remittance companies over concerns cash could be funding terror groups such as al-Shabab.

Legal action against the move came to the High Court on Monday, but the case was adjourned for two weeks, during which Barclays has agreed to stay closure plans while the biggest money transfer organisation, Dahabshiil, applies for an injunction to stop the closure of its account.

Dahabshiil is based in Whitechapel, catering for Tower Hamlets’ large Somali population.

Ms Ali said of Barclays’ plans to close money transfer firms’ accounts: “Too many people in the developing world are dependent on this lifeline, and too many people in Britain have close family and elderly relatives they are trying to help, to let this decision stand.”

But a Barclays spokesman said: “We believe this case is baseless and the hearing has been adjourned to a date when the court can consider the issues fully. Barclays has given Dahabshiil a short extension during which time we hope it can finalise alternative banking services.”

The Central Bank of Somalia estimates that more than £925m is sent to the country each year.

Somali-born Mo Farah has joined the campaign to keep the cash transfers. The double Olympic and World Champion said the services are essential to families for food and other vital resources, and warned there could be a crisis if they are shut down.

Aid charity Oxfam welcomed the reprieve, but called for a longer term solution to the problem to be found.

Campaigns and policy director Ben Phillips said: “Barclays needs to keep all accounts open until a long-term answer is found.

“The Treasury should now show leadership by urgently pushing for a robust solution that ensures ordinary Somalis are not penalised by regulations intended to crack down on illicit financial flows.”