UN chief Ban Ki-moon slammed Israel's blockade of the Gaza Strip during a tour of the war-battered coastal territory on Sunday, saying it was causing "unacceptable suffering."

The visit came as part of a two-day regional tour aimed at reviving Israeli-Palestinian peace talks that last collapsed during Israel's offensive into Gaza in December 2008 and January 2009, which killed up to 1500 Palestinians.

"I have repeatedly made it quite clear to Israel's leaders that the Israeli policy of closure is not sustainable and that it's wrong," Ban told reporters in the southern Gaza Strip town of Khan Yunis.

"It causes unacceptable suffering," he said, adding that he was saddened to see that teenagers and children were the worst affected.

"This policy is also counter-productive. It prevents legitimate commerce and encourages smuggling."

It was the UN chief's second visit to Gaza since thousands of houses were severely damaged or destroyed by Israeli forces as well as UN-run buildings.

Ban toured some of the hardest-hit areas of Gaza before announcing projects to build 150 homes, a flour mill and a sewage treatment plant, for which Israel has given rare approval for the import of construction materials.

Ban hailed the projects but said the sight of houses that remain in ruins more than a year after the war ended was "quite distressing" and that more reconstruction was needed, calling the projects a "drop in the bucket."

Ban's visit is part of a two-day regional tour in which he encouraged Israeli and Palestinian leaders to revive the peace process.

Earlier this month the Palestinians grudgingly agreed to indirect talks with Israel after months of US shuttle diplomacy, but progress stalled two days later when Israel announced plans for 1,600 settler homes in east Jerusalem.

The Palestinians have refused to hold direct negotiations unless Israel halts settlement construction in the occupied West Bank and east Jerusalem, which they view as the capital of their future state.

The Gaza blockade has fuelled unemployment which now stands at more than 50 percent among the 1.5 million population.

The UN secretary-general's Gaza visit follows on from a tour of the West Bank a day earlier where he reiterated demands that Israel end settlement building in Palestinian territory.

"Let us be clear, all settlement activity is illegal anywhere in occupied territory and this must stop," Ban said, speaking at a joint news conference with Salam Fayyad, the Palestinian prime minister.

Ban emphasised the commitment of the so-called international Quartet of Middle East negotiators - comprised of the UN, the European Union, Russia and the US - to the establishment of a Palestinian state.

He also met Israeli officials, including Shimon Peres, the Israeli president, as part of his trip.

"The Quartet has sent a clear and strong message: we are strongly supporting your efforts to establish an independent and viable Palestinian state," Ban said.


Agencies