United Nations Secretary General Kofi Annan has described Israel's decision to construct the West Bank security fence as "deeply counter-productive".
The Israelis say the barrier will stop suicide bombers
His remarks have been published in a report called for by a UN General Assembly resolution last month.
The UN report says that as a result of the partition, Palestinians have lost access to land, hospitals and schools.
Israel argues that it needs the 600-km (320-mile) barrier to protect its citizens against suicide bombers.
Israeli Prime Minister Ariel Sharon vowed on Thursday to press ahead with the barrier, which stretches from north to south.
"We are speeding up the construction of the fence and we will not stop. It is vital for the security of the state and it is our
responsibility," he said.
Mr Sharon did, however, appear to concede that Israel would be forced to give up some Palestinian territory in accordance with the US-backed roadmap, or peace plan.
Israel under pressure
Mr Annan said the fences, walls, razor wire and trenches constituted a violation of international law and could jeopardise longer-term prospects for peace.
"In the midst of the road map process, when each party should be making good-faith confidence-building gestures, the barrier's construction in the West Bank cannot... be seen as anything but a deeply counter-productive
act," he said.
Israel is facing increasing international pressure to dismantle the barrier.
During last week's visit to London, US President George W Bush delivered an unusually sharp message about the construction of settlements and "the placement of walls and fences" which might prejudice final negotiations.
On Wednesday, the US said it was cutting nearly $290m from a loan guarantee package to Israel in response to its actions.
The money comes from a $9bn package of loan guarantees and does not affect Washington's direct aid for Israel.
The US move means Israel will not be able to raise as much money in loans from foreign banks.