The International Committee of the Red Cross has described the 1.5 million Palestinians living in Gaza as people "trapped in despair", reported BBC.
In a report, it said that a main cause was the continuing Israeli blockade.
The report comes six months after the end of Israel's military offensive in Gaza in which at least 1,100 Palestinians died.
Israel said the offensive was aimed at curbing rocket attacks into southern Israel by Palestinian militants.
The Red Cross says that the people of Gaza are unable to rebuild their lives and sliding ever deeper into despair.
There is not the cement or steel to reconstruct neighbourhoods hit by Israeli strikes.
Seriously ill patients are not receiving the treatment they need. The water supply is patchy, sanitation on the point of collapse.
Poverty is at what the Red Cross calls an "alarming" level. Large numbers of children are malnourished.
All this, says the Red Cross, is directly linked to Israel's tight closure of the crossing points into Gaza after the Islamist Hamas movement took power there two years ago.
The Israeli prime minister's spokesman told the BBC that Hamas is primarily responsible for the hardship of Gaza's civilian population.
And he said the idea that, should building materials be allowed in, Hamas would not siphon them off for what he called its military machine was simply not credible.