GENEVA: United Nations human rights investigators called on Israel Thursday to halt settlement expansion and withdraw all half a million Jewish settlers from the occupied West Bank, saying that its practices could be subject to prosecution as possible war crimes.

A three-member panel mandated by the U.N. said private companies should stop working in the settlements if their work adversely affected Palestinians, and urged member states to ensure companies respected human rights.

“Israel must cease settlement activities and provide an adequate, prompt and effective remedy to the victims of violations of human rights,” Christine Chanet, a French judge who led the U.N. inquiry, told a news conference.

The settlements contravened the Fourth Geneva Convention forbidding the transfer of civilian populations into occupied territory and could amount to war crimes that fall under the jurisdiction of the International Criminal Court, the report said.

“To transfer its own population into an occupied territory is prohibited because it is an obstacle to the exercise of the right to self-determination,” Chanet said.

All U.N. member states must comply with their duty under international law on the issue of settlements, she said. “We have highlighted states’ responsibility because the facts we denounce are known. The problem is nobody is doing anything about it,” she added.

U.N. Secretary-General Ban Ki-moon reacted to the inquiry’s findings by repeating his position that “all settlement activity in the occupied Palestinian territory, including East Jerusalem, is illegal under international law,” according to a statement.

In a letter to the United Nations in December, the Palestinians accused Israel of planning to commit additional war crimes by expanding Jewish settlements after the Palestinians won a de facto U.N. recognition of their statehood, and said Israel must be held accountable. The Jewish state has not cooperated with a probe set up by the Human Rights Council last March to examine the impact of settlements in the territory, including East Jerusalem. Israel says the forum has an inherent bias against it and defends its settlements by citing historical and biblical links to the West Bank.

Israel’s Foreign Ministry swiftly rejected the report as “counterproductive and unfortunate.” Palestinians welcomed the report, saying it vindicated their struggle against Israel.

“The only way to resolve all pending issues between Israel and the Palestinians, including the settlements issue, is through direct negotiations without preconditions. Counterproductive measures – such as the report before us – will only hamper efforts to find a sustainable solution to the Israel-Palestinian conflict,” Israel’s Yigal Palmor said.

But Hanan Ashrawi, a senior PLO official, told Reuters in Ramallah: “This is incredible. We are extremely heartened by this principled and candid assessment of Israeli violations.”

The independent U.N. investigators interviewed more than 50 people who came to Jordan in November to testify about confiscated land, damage to their livelihoods, and violence by Jewish settlers, according to the report.

“The mission believes that the motivation behind this violence and the intimidation against the Palestinians as well as their properties is to drive the local populations away from their lands and allow the settlements to expand,” it said.

About 250 settlements in the West Bank, including in East Jerusalem, have been established since the 1967 Middle East war and now house 520,000 settlers, the report said. The settlements impede Palestinian access to water and farmland.

The settlements were “leading to a creeping annexation that prevents the establishment of a contiguous and viable Palestinian state and undermines the right of the Palestinian people to self-determination,” it said.

Chanet said firms working in the territories must uphold human rights. A case accusing France’s Veolia – which built Jerusalem’s light rail linking the western side of the city to the eastern side occupied by Israel since the 1967 war – of violating the Geneva Conventions is now on appeal. The charges brought against the company in the High Court of Nanterre court were initially dismissed in May 2011.

After the General Assembly upgraded the Palestinians’ status at the global body, Israel said it would build 3,000 additional settler homes in the West Bank and East Jerusalem – areas Palestinians claim for a future state, along with the Gaza Strip.

“I think that maybe it will help in the negotiation just to see that now, and especially when Palestine has been recognized as a state, things might change. Maybe, we hope. And now there is a new government in Israel,” Chanet said.

“So things are moving. So we hope that our report will be in the middle of this movement.”