UN chief Ban Ki-moon has called on Israel's Prime Minister Benjamin Netanyahu to hand over tax payments owed to the Palestinian Authority and to stop settlement activity, his spokesman said.

The UN secretary general "stressed the need to de-escalate" Israeli-Palestinian tensions that have heightened since the Palestinian bid to become a member of the United Nations, said spokesman Martin Nesirky, giving an account of telephone talks between Ban and Netanyahu Tuesday.

After UNESCO agreed to accept the Palestinian Authority last month, Israel withheld payments of VAT and customs revenues that it collects on behalf of the Palestinian Authority. The UN estimates about USD 100 million a month is involved.

Israel also announced new approvals for settlements. "The secretary general appealed to Prime Minister Netanyahu to immediately resume the transfer of Palestinian tax and customs revenues, in line with Israel's legal obligations," said Nesirky.

"He also expressed his deep concern about Israel's announcement of further settlement expansions, including in east Jerusalem, which undermine current peace efforts and violate international law."

Ban said Israel had to contribute to efforts to ease tensions "to create an environment conducive for the resumption of direct negotiations."

Talks between the two sides have been halted since September last year when Israel ended a moratorium on settlement construction.

The diplomatic Quartet on the Middle East -- the United States, European Union, Russia and United Nations -- launched a new bid to hold talks on September 23 when Palestinian president Mahmoud Abbas made his application to join the UN. International envoys have struggled to bridge the gap between the two sides however.

In his talks with Netanyahu, Ban welcomed Israel's approval of new UN construction projects worth USD 5.5 million in Gaza "while calling for further measures towards lifting the closure" of the territory, Nesirky said.