( BBC ) - The United Nations Secretary-General, Ban Ki-Moon, has urged Israel to reconsider its decision to declare the Gaza Strip a "hostile entity".
The Israeli government has said it will cut off energy supplies to Gaza in response to the continued rocket attacks by Palestinian militants there.
Mr Ban said that withholding vital supplies from civilians would violate international law.
But US Secretary of State Condoleezza Rice defended Israel's position.
Ms Rice said the US considered Hamas a "hostile entity".
But she added the US "would not abandon the innocent Palestinians" of Gaza.
Ms Rice arrived in Jerusalem on Wednesday for talks about re-starting the Middle East peace process.
Israeli public pressure for retaliation has grown since a rocket fired from Gaza hit an army base last Tuesday, injuring 69 troops.
'Humiliating formulas'
Mr Ban said in a statement he was "very concerned" about Israel's decision.
"Such a step would be contrary to Israel's obligations towards the civilian population [of Gaza] under international humanitarian and human rights law," he said.
The militant group Hamas, which controls Gaza, said Israel's move would be considered a declaration of war.
Palestinian militant groups say the rocket fire is a response to Israeli military action in Gaza and the West Bank.
Israeli Prime Minister Ehud Olmert's office said his security cabinet had approved the "hostile entity" classification on Wednesday morning.
"Additional restrictions will be imposed on the Hamas regime, limiting the transfer of goods to the Gaza Strip, cutting back fuel and electricity, and restricting the movement of people," a statement said.
During a news conference with Ms Rice, Israeli Foreign Minister Tzipi Livni defended the move.
She said: "We made this decision according to our legal advisor, so it is according to international law.
"It is not going to affect the humanitarian situation in the Gaza Strip."
But a spokesman for Hamas in Gaza, Fawzi Barhoum, said: "It is a declaration of war and continues the criminal, terrorist Zionist actions against our people.
"They aim to starve our people and force them to accept humiliating formulas that could emerge from the so-called November peace conference," he added, referring to the US-sponsored talks expected later this year.
The Palestinian Information Minister, Riyad al-Malki, said the Palestinian Authority would ask the US to "pressure Israel to refrain from taking such action".
Correspondents say that by formally declaring Gaza "hostile", Israel could argue that it is no longer bound by international law governing the administration of occupied territory to supply utilities to its 1.5 million inhabitants.
But the current position is that, under international law, Israel remains legally responsible for the coastal strip, despite withdrawing two years ago, because it still controls Gaza's borders, airspace and territorial waters.
The Israeli move will only be seen by Palestinians as a form of collective punishment and risks consolidating support for Hamas in Gaza, BBC diplomatic correspondent Jonathan Marcus says.
Ms Rice is in the Middle East for talks ahead of the peace conference.
She is due to meet Mr Olmert and the Palestinian Authority President Mahmoud Abbas.