An independent commission of inquiry set up by the UN Human Rights Council after the 2021 Gaza war said must do more than end the occupation of land, according to a released on Tuesday.
"Ending the occupation alone will not be sufficient," the report said, urging additional action to ensure the equal enjoyment of human rights.
It cited evidence saying Israel has "no intention of ending the occupation" and is pursuing "complete control" over the occupied Palestinian territories, including East Jerusalem, which was taken by Israel in a 1967 war.
Israel boycotted the inquiry and barred entry to its investigators.
Israel's Foreign Ministry said: "It is a biased and one-sided report tainted with hatred for the State of Israel and based on a long series of previous one-sided and biased reports."
While prompted by the 11-day May 2021 conflict in which 250 Gaza Palestinians - including dozens of children - and 13 people in Israel died, the inquiry mandate includes alleged human rights abuses before and after that and seeks to investigate the root causes of the tensions.
US State Department spokesperson Ned Price said Washington opposes the inquiry and said the report does nothing to alleviate its concerns over "a one-sided, biased approach that does nothing to advance the prospects for peace."
Citing an Israeli law denying naturalisation to Palestinians married to Israelis, the report accuses the country of affording "different civil status, rights and legal protection" for Arab minorities.
Israel withdrew from Gaza in 2005 but, with the help of Egypt, has continued a devastating siege on the land strip. Palestinian authorities have limited self-rule in the West Bank, where illegal Israeli settlements cover and divide the territories.
Hamas fired rockets into Israel after Israeli attempts to uproot Palestinian families from their homes in East Jerusalem, and in retaliation for Israeli police attacking Palestinians near Al-Aqsa Mosque, Islam's third holiest site.
Israel's Gaza bombardment was accompanied by rare street violence within Israel between Jewish and Palestinian citizens.
Hamas welcomed the report and urged the prosecution of Israeli leaders in what it said were crimes against the Palestinian people.
The Palestinian Authority also praised the report and called for accountability "in a manner that puts an end to Israel's impunity".
The report will be discussed at the Geneva-based Human Rights Council next week. The body cannot make legally binding decisions.
The United States quit the Council in 2018 over what it described as its "chronic bias" against Israel and only fully rejoined this year.
Unusually, the three-member commission of inquiry from Australia, India and South Africa has an open-ended mandate. A diplomat said that its mandate was already a sensitive issue. "People don't like the idea of perpetuity," he said.