UNITED Nations human rights officials have called on Israel to halt settlement expansion and withdraw all half a million Jewish settlers from the occupied West Bank, saying its practices may be subject to prosecution as war crimes.

A three-member UN panel said private firms should stop working in the settlements if their work adversely affected the human rights of Palestinians and urged member states to ensure companies respected human rights.

"Israel must cease settlement activities and provide adequate, prompt and effective remedy to the victims of violations of human rights," Christine Chanet, a French judge who led the UN inquiry said.

The settlements contravened the Fourth Geneva Convention forbidding the transfer of civilian populations into occupied territory and could amount to war crimes that fall under the jurisdiction of the International Criminal Court, the UN report said.

In December, the Palestinians accused Israel of planning to commit what it said were further war crimes by expanding Jewish settlements after the Palestinians won de facto UN recognition of statehood, and said Israel must be held accountable.