A United Nations human rights rapporteur says continued settlement construction will probably make Israel's occupation of Palestinian land irreversible.
Richard Falk said the peace process aimed at creating an independent, sovereign Palestinian state therefore appears to be based on an illusion reports the BBC.
He said the UN, the US and Israel had failed to uphold Palestinians' rights.
Israeli officials said Mr Falk's report was biased and served a political agenda.
Nearly half a million Jews live in more than 100 settlements built since Israel's 1967 occupation of the West Bank and East Jerusalem.
They are held to be illegal under international law, although Israel disputes this.