UN Secretary-General Antonio Guterres has defended his choice to appoint former Palestinian Prime Minister Salam Fayyad as UN envoy to Libya and expressed his "deep" regret over US opposition to his appointment.

Guterres described Fayyad, a former World Bank official with a track record of fighting corruption, as "the right person for the right job at the right moment" in his remarks at the annual World Government Summit hosted by Dubai on Monday.

"I deeply regret this opposition and I do not see any reason for it," Guterres said.

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"It is a loss for the Libyan peace process and the Libyan people," he said, adding that the UN "needs to be able to act with impartiality".

The UN secretary-general on Wednesday had informed the Security Council of his intention to appoint Fayyad as a replacement for German Martin Kobler to conflict-torn Libya.

However, Nikki Haley, US ambassador to the UN, vetoed the appointment, saying Washington did not support the message the move would send.

Trump's criticism

US President Donald Trump had criticised the UN, before he was elected, as "just a club for people to get together, talk and have a good time" while a spokeswoman said the new administration would "demand some reform and change".

Israeli Prime Minister Benjamin Netanyahu hailed the US veto of Fayyad as counter to the "free gifts constantly given to the Palestinian side".

The head of the UN requires the unanimous support of all 15 Security Council members for appointments of special representatives to conflict areas.

Libya has been in turmoil since a 2011 revolution overthrew and killed longtime dictator Muammar Gaddafi.

Fayyad served as prime minister of the Palestinian Authority from 2007 until 2013.

Fayyad, an economist, regularly worked with Israeli officials during his time heading the Palestinian government. He was generally well-received in the West and seen as a competent leader.