UN Secretary-General Ban Ki-moon on Tuesday slammed Israel's settlement activities as "provocative acts" that raise questions about the nation's commitment to a two-state solution amid growing Palestinian frustration over nearly 50 years of occupation.

The Palestinians want an independent state in the West Bank, Gaza and East Jerusalem, areas Israel captured in a 1967 war. The last round of peace talks broke down in April 2014, and Israeli-Palestinian violence has surged in recent months.

Israel confirmed on Thursday that it would appropriate a large tract of fertile land in the occupied West Bank. The land is near Jordan in an area where Israel already has many settlement farms built on land Palestinians seek for a state.

Ban said he was "deeply troubled" by reports that the Israeli government had approved plans for more than 150 new homes in "illegal settlements in the occupied West Bank".

"These provocative acts are bound to increase the growth of settler populations, further heighten tensions and undermine any prospects for a political road ahead," Ban told a United Nations Security Council meeting on the Middle East.

"Continued settlement activities are an affront to the Palestinian people and to the international community," he said. "They rightly raise fundamental questions about Israel's commitment to a two-state solution."

He said frustration was growing among Palestinians.

Israeli Prime Minister Benjamin Netanyahu dismissed Ban's remarks, saying they only "bolster terrorism".

"The Palestinian murderers do not want to build a state; they declare publicly that they want to destroy a state," Netanyahu said in a statement. "The UN has long ago lost its neutrality and its moral powers."

US Ambassador to the United Nations Samantha Power said Washington strongly opposed settlement activity.

"Steps aimed at advancing the Israeli settlement programme...are fundamentally incompatible with the two-state solution and raise legitimate questions about Israel's long-term intentions," Power told the council.

About 550,000 Jewish settlers live in the West Bank and East Jerusalem, according to Israeli government and think-tank statistics. About 350,000 Palestinians live in East Jerusalem and 2.7 million in West Bank.

Riyad Mansour, the chief Palestinian delegate at the United Nations, called on the Security Council take action against Israeli settlements.

"It must involve measures by all states and go beyond not rendering aid or assistance to holding Israel accountable for its actions," Mansour said.