From news article:
In 1949, the United Nations Conciliation Commission for Palestine (UNCCP) held a months-long conference in Lausanne with Israelis, Arab countries and representatives of Palestinian Arabs to discuss how to solve the issues that came up from the 1948 war, including boundaries, Jerusalem and refugees.
Perhaps the failure of the Commission is best indicated by its failure to have done anything about the 200,000 Arab refugees who have fled, not from Israeli occupied territory, but from Arab occupied Palestine. There was no political obstacle to their repatriation. Yet they continue to sit in camps and refugee villages without anyone lifting a finger to get them back to their homes. Next there are 200,000 destitute Arabs who are not refugees but who draw assistance form the relief funds or live in refugee camps. Their problem will not be settled by repatriation of genuine refugees. What are they waiting for? In other words almost half the total problem of the so-called refugees could have been tackled without waiting on Israeli agreement for anything. It detracts considerably from the humanitarian argument used to persuade Israel to do something quick while these conditions continue unbettered.
It seems to have been well known, at least among those who followed the issue, that a significant number of "refugees" did not come from the territory controlled by Israel!
This seems consistent with research that Efraim Karsh did to count the number of 1948 Arab refugees. He calculated between 583,000-609,000 refugees from Israeli territory during the war. But the UNRWA's first count of "refugees" done at the end of 1949 came up with 962,000! (I believe that they reduced that number in their second estimate to something lower than 900,000 after accounting for fraudulent claims, mostly for people who died and who didn't exist.)
The first UNRWA report accepted that there were over 150,000 destitute Arabs who were seeking aid from the Agency who were not refugees, so it is unclear if they were included in that initial number - or if they ended up being included anyway. UNRWA and other organizations at the time also freely admitted that the Arabs were exaggerating their numbers. "Many of the needy are now actually in poorer circumstances than the average refugee because the latter receives food, medical care and some clothing, little of which is available to the non-refugee."