Jerusalem (AFP) - Israeli Prime Minister Benjamin Netanyahu Tuesday accused the UN chief of "encouraging terror" after Ban Ki-moon spoke of Palestinian frustration at Israel's occupation and said it was natural to resist.

"The comments of the UN Secretary General encourage terror," Netanyahu said in a statement. "There is no justification for terror."

Earlier, Ban told the UN Security Council of the "profound sense of alienation and despair driving some Palestinians -– especially young people" in the upsurge of attacks on Israelis since the start of October.

"Palestinian frustration is growing under the weight of a half century of occupation and the paralysis of the peace process," he said.

"As oppressed peoples have demonstrated throughout the ages, it is human nature to react to occupation, which often serves as a potent incubator of hate and extremism."

Violence since October 1 has killed 159 Palestinians and 25 Israelis, as well as an American and an Eritrean, according to an AFP count.

Most of the Palestinians killed since October have been attackers, while others have been shot dead by Israeli forces during protests and clashes.

Ban condemned the Palestinian attacks, but said Israeli settlement building cast doubt on Israel's commitment to the goal of an independent Palestine alongside the Jewish state.

"Continued settlement activities are an affront to the Palestinian people and to the international community," he said.

"They rightly raise fundamental questions about Israel's commitment to a two-state solution."

Netanyahu responded that the Palestinians themselves were not working for two states.

"The Palestinian murderers do not want to build a state, they want to destroy a state and they say it out loud," he said.

"They want to murder Jews wherever they are and they say so out loud. They do not murder for peace and they do not murder for human rights."

- Netanyahu under pressure -

An Israeli woman stabbed and killed by two Palestinians in a West Bank settlement was buried on Tuesday as pressure mounted on Netanyahu's government to stem a new wave of attacks.

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Shlomit Krigman, 24, died overnight of wounds from Monday's attack.

The two attackers, identified by Palestinian media as Ibrahim Allan, 23, and Hussein Abu Ghosh, 17, were shot dead by a security guard.

It was the third attack inside a West Bank settlement since January 17, when an Israeli woman was stabbed to death by a 15-year-old Palestinian at the entrance to her home in Otniel.

A day later, an Israeli woman was stabbed and wounded by a 17-year-old Palestinian in Tekoa.

Before January 17, Jewish settlements built on land occupied by Israel in 1967 and considered illegal by much of the international community had been spared much of the violence.

But Monday's stabbings increased domestic pressure on the Israeli government, which derives much of its support from the settler community.

Netanyahu said on Monday he had instructed the army to submit a "comprehensive plan" to better ensure the security of settlements.

He also announced he would revoke the work permits of the attackers' relatives, which allow them to be employed in the settlements or in Israel.

The army also sealed off the Palestinian village of Beit Ur al-Tahta, home of one of the two attackers and which is close to Beit Horon, an army spokesman said.

About 400,000 Israeli settlers live alongside around 2.5 million Palestinians in the occupied West Bank.

The United States, United Nations and the European Union oppose all Israeli settlement building, and consider it an obstacle to peace.

Israel's defence ministry, however, has approved the construction of 153 new settler homes in the West Bank, the Israeli settlement watchdog Peace Now said on Monday.

The move marks the end of an informal construction freeze in the Palestinian territory that lasted 18 months, the NGO said.

US-backed peace talks between the Palestinians and Israel collapsed in April 2014 amid bitter mutual recriminations.

A chief grievance of the Palestinians was Israeli settlement building on land they claim for a future state.