Continued expansion of Israeli settlements and their outposts, along with other measures, have significantly reduced the availability of land for Palestinians restricting their livelihoods and development, a new report by the UN humanitarian affairs agency has said.

Israeli expansionist measures have reduced to 13 per cent the availability of land in Bethlehem for Palestinian use, limited the area's access to resources and restricted its potential for development, said the report by the UN Office for Coordination on Humanitarian Affairs (UCHA).

"The space available to the Palestinian population in the Bethlehem governorate has been significantly constricted by Israeli measures such as the continued expansion of Israeli settlements and their outposts," it said.

These measures have reduced Bethlehem's development space, limited its access to resources, severed Bethlehem's historic links to Jerusalem and restricted the urban area's potential for residential and industrial expansion, it said.

The report noted that the traditional mainstays of the Bethlehem economy such as work in Israel, tourism, agriculture herding and the private sector have been undermined.

While only 13 per cent of land in Bethlehem is available for Palestinian use, and much of it is fragmented. In addition, Israel retains security control and jurisdiction over building and planning in 66 per cent of the governorate.

Also, the fenced barrier being constructed by the Israeli government already reaching 10 kilometres into the West Bank, if completed, will cut off some of the most fertile cultivated land in the governorate as well as 21,000 Palestinian villagers from the urban centre, the report said.

As of now, the report said, around 175,000 Palestinians live in the Bethlehem governorate. Since 1967, some 86,000 Israelis have also been settled there, and they live in 19 settlements and 16 settlement outposts.

OCHA also outlines steps that can be taken to prevent further deterioration, including halting construction of the Barrier inside the West Bank, opening closed military areas and nature reserves for sustainable Palestinian development, and freezing settlement construction.