Thousands of Palestinians on Thursday rallied in the West Bank against the US veto of a UN Security Council resolution criticising Israeli settlement building.

In Nablus, at least 5,000 people, many waving flags or holding banners, lashed out at President Barack Obama's administration for nixing the resolution, which criticised Jewish settlement activity.

"The US veto puts Israel above international law," some chanted during the demonstration in the northern West Bank town.

"We came here today to say no to the US veto, the veto of shame," said Mahmud Ishtayeh, a local official in the Fatah party of Palestinian president Mahmud Abbas.

Another 1,500 people demonstrated in Ramallah against what was the first US veto since Obama took office.

The resolution, drafted by the Palestinian leadership in an attempt to pressure Israel to halt settlement construction in the West Bank and east Jerusalem, was supported by all 14 other members of the Security Council.

The United States denied its veto should be interpreted as support for Israeli settlement construction, but said it did not believe the United Nations was the best place to resolve the Israeli-Palestinian conflict.

Palestinian officials have said they will launch a new bid for UN condemnation of Israeli settlement building, bringing a resolution before the General Assembly.

Demonstrators in Nablus and Ramallah also called for unity between the Palestinian Authority, which controls the West Bank, and Hamas, the movement that rules the Gaza Strip.

Hamas and Fatah, which dominates the Palestinian Authority, are longstanding rivals, but tensions between them boiled over in 2007, when the Islamist group ousted its Fatah opponent from Gaza.

Successive reconciliation talks between the two sides have failed.