Israel has said it rejects a UN resolution declaring its settlements in occupied Palestinian territories illegal, and says it will not abide by its terms.

The UN Security Council voted to call for an end to the settlements after the US refused to use its veto to block the resolution.

"Israel rejects this shameful anti-Israel resolution at the U.N. and will not abide by its terms," a statement from the office of Benjamin Netanyahu said.

The Israeli Prime Minister said his administration was looking forward to working with Donald Trump to negate Friday's resolution.

In other reaction, the UN Secretary-General Ban Ki-moon welcomed the adoption of the resolution, his spokesman said.

"The secretary-general takes this opportunity to encourage Israeli and Palestinian leaders to work with the international community to create a conducive environment for a return to meaningful negotiations," spokesman Stephane Dujarric said.

Israel earlier said it expected Mr Ban's departure as Secretary-General, as well as the inauguration of Mr Trump, to herald a new era of UN-Israel relations.

Given the world's widespread opposition to settlements, the action will be almost impossible for anyone, including Mr Trump, to reverse.

Nevertheless, the president-elect vowed via Twitter: "As to the UN, things will be different after Jan 20th."

The resolution said Israel's settlements in lands the Palestinians want to include in their future state have "no legal validity". It demanded a halt to such activities for the sake of "salvaging the two-state solution".

Loud applause erupted in the council chamber after US ambassador Samantha Power permitted the resolution to pass.