The United Nations human rights office said on Wednesday it has identified 206 companies doing business linked to Israeli settlements in the West Bank, where it said violations against Palestinians are "pervasive and devastating".

"Businesses play a central role in furthering the establishment, maintenance and expansion of Israeli settlements," the UN High Commissioner for Human Rights (OHCHR) report said.

"In doing so, they are contributing to Israel's confiscation of land, facilitate the transfer of its population into the Occupied Palestinian Territory and are involved in the exploitation of Palestine's natural resources," it said.

Israel fears that companies on any UN "blacklist" may become targets of boycotts or divestment aimed at stepping up pressure over its settlements, which most countries and the world body view as illegal.

"The majority of these companies are domiciled in Israel or the settlements (143), with the second largest group located in the United States (22). The remainder are domiciled in 19 other countries," the UN human rights office said in a statement.

The UN report did not identify the companies and added that its database was not yet complete.

Israel's UN envoy Danny Danon, who lives in a settlement, strongly condemned the report, noting it was released "on the day that the UN is marking International Holocaust Remembrance Day".

"This is a shameful act, which will serve as a stain on the UNHRC forever," he said.

"We will continue to act with our allies and use all the means at our disposal to stop the publication of this disgraceful blacklist."

The report said that the work in producing the UN database "does not purport to constitute a judicial process of any kind".

Still, businesses operating in the Occupied Territories have a corporate responsibility to carry out due diligence and consider "whether it is possible to engage in such an environment in a manner that respects human rights," it said.

Israel's main ally, the United States, says the 47-member council is stacked with opponents of Israel. US ambassador Nikki Haley told the council last June that it was reviewing its participation given the forum's "chronic anti-Israel bias".

The report is to be debated at the OHCHR session on 26 February.

More than 600,000 Israeli settlers live in the occupied West Bank, including East Jerusalem.