The United Nations' highest court said on Friday that Israel's occupation of Palestinian territories and settlements there are illegal and should be withdrawn as soon as possible, in its strongest findings to date on the Israel-Palestinian conflict.

The advisory opinion by judges at the International Court of Justice (ICJ), known as the World Court, was not binding but carries weight under international law and may weaken support for Israel.

"Israeli settlements in the West Bank and East Jerusalem, and the regime associated with them, have been established and are being maintained in violation of international law," President Nawaf Salam said, reading the findings of a 15-judge panel.

The court said Israel's obligations include paying restitution for harm and "the evacuation of all settlers from existing settlements".

In a swift reaction, Israel's foreign ministry rejected the opinion as "fundamentally wrong" and one-sided, and repeated its stance that a political settlement in the region can only be reached by negotiations.

"The Jewish nation cannot be an occupier in its own land," Israeli Prime Minister Benjamin Netanyahu's office said in a statement.

The ICJ opinion also found that the UN Security Council, the General Assembly and all states have an obligation not to recognise the occupation as legal nor "render aid or assistance" toward maintaining Israel's presence in the occupied territories.

The Palestinian Foreign Ministry called the opinion "historic" and urged states to adhere to it.

"No aid. No assistance. No complicity. No money, no arms, no trade...no actions of any kind to support Israel's illegal occupation," Palestinian envoy Riyad al-Maliki said outside the court in The Hague. (Reuters)