The Obama administration on Friday abstained from vetoing a United Nations Security Council measure to declare Israeli settlements on east Jerusalem illegal.

The United States avoided voting in favor of the resolution but at the same time refrained from canceling it, which calls Israeli settlements in West Bank and East Jerusalem as "flagrant violation of international law."

"It is because this forum too often continues to be biased against Israel; because there are important issues that are not sufficiently addressed in this resolution; and because the United States does not agree with every word in this text, that the United States did not vote in favor of the resolution," said Samantha Powers, US Ambassador to the UN.

Israeli Prime Minister Benjamin Netanyahu said that in the aftermath of the resolution the country is reconsidering its ties with the United Nations.

The resolution is not expected to impact the real situation, but is a taken as a gesture inclined not in favor of Israel.

In previous decades, the United States had been protecting Israel in the council by vetoing decisions against the settlements. This time, the measure passed 14-0, with the conspicuous absence of vote by the US which had used its veto power in the past.

"I instructed the Foreign Ministry to complete within a month a re-evaluation of all our contacts with the United Nations, including the Israeli funding of U.N. institutions and the presence of U.N. representatives in Israel," Netanyahu said in broadcast remarks.

"I have already instructed to stop about 30 million shekels ($7.8 million) in funding to five U.N. institutions, five bodies, that are especially hostile to Israel ... and there is more to come," he continued.

UN chief Ban Ki Moon's spokesperson defended the resolution.

"The resolution is a significant step, demonstrating the Council's much needed leadership and the international community's collective efforts to reconfirm that the vision of two States is still achievable," the spokesperson said in a statement.

"The Secretary-General takes this opportunity to encourage Israeli and Palestinian leaders to work with the international community to create a conducive environment for a return to meaningful negotiations," he added. "The United Nations stands ready to support all concerned parties in achieving this goal."

Danny Danon, Israeli Ambassador to the UN voiced his disagreement with the resolution, saying that the resolution goes against history.

"Neither the Security Council nor UNESCO will rewrite history and to sever the link between the people of Israel and the land of Israel. Efforts to attack Israel through the United Nations will not help and will not further a solution," he said.