The UN Human Rights Council on Thursday passed a resolution ordering a first probe into how Israeli settlements may be infringing on the rights of the Palestinians.
The resolution was adopted by the 47-member council with 36 votes in favour and 10 abstentions. Only the United States voted against it.
Israeli Prime Minister Benjamin Netanyahu branded the resolution "hypocritical" and charged that the council "has an automatic majority hostile to Israel", saying the body "should be ashamed of itself."
Presenting the resolution, a Pakistani envoy criticised Israel for insisting on expanding settlements in the occupied territories, "in violation of international humanitarian and human rights laws."
"This resolution seeks to respond to the humanitarian and human rights challenges this illegal Israeli practice has created in the occupied territories," he said.
Beyond ordering a probe into the implications of settlements, the resolution also calls on Israel to "take and implement serious measures" such as confiscating arms to prevent acts of violence by Israeli settlers.
Condemning Israel's announcements of new settlement homes, it demanded a reversal of the policy.
But the United States spoke up against the move, saying it was "deeply troubled by this council's bias against Israel."
"Steps like this do nothing to promote a just and lasting peace," said a US envoy, adding that they only serve to "push parties apart."
Israel's envoy also challenged the resolution, one of several against the country.
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"Many of the speakers today and in many other occasions in this room repeatedly emphasize the ideals of non-partiality, non-selectivity, non-politicization," said the envoy.
"Why are these principles no longer relevant when it comes to" resolutions concerning Israel?"
Israel's foreign ministry said the resolution "is yet another surrealistic decision from the workshop of a council that is instrumentalised as a tool to push for one-sided politicised moves instead of promoting human rights."
"While all over the Middle East, human rights are violated in an unprecedented scale, the HRC ridicules itself by dedicating its time and resources to establish a superfluous and extravagant body whose sole purpose is to satisfy the Palestinians' whims."
Israel's move to expand settlements has been criticised by the international community, which deems the action illegal.
Nevertheless, in late February, an Israeli committee legalised an unauthorised settler outpost in the northern West Bank and approved a plan for 500 new homes there.
The move was condemned as "deplorable" by the UN's Middle East envoy Robert Serry, who said it "moves us further away from the goal of a two-state solution."
This week, UN rights chief Navi Pillay said the expansion of Israeli settlements is deeply linked to problems including violence in the Occupied Palestinian Territory.
More than 310,000 Israelis live in settlements in the occupied West Bank and the number is growing.
Another 200,000 live in a dozen settlement neighbourhoods in east Jerusalem, which was captured by Israel in 1967 and annexed in a move never recognized by the international community.