In a 34-page report on the Israeli-Palestinian conflict, Pillay also called on Israel to stop expanding its West Bank settlements and punish all settlers who attack Palestinians.
Israeli Ambassador Aharon Leshno-Yaar rejected the findings of the U.N. high commissioner for human rights. He said the report reflected the anti-Israel bias of the U.N. Human Rights Council that commissioned it, and failed to note recent Israeli moves to ease restrictions on Palestinians.
Leshno-Yaar, Israel's ambassador to the United Nations in Geneva, said Pillay "didn't make any effort to investigate things herself, which is quite unfortunate."
Pillay said the Gaza blockade amounts to collective punishment of civilians, which is prohibited under the Geneva Conventions on the conduct of warfare and occupation.
She cited the conventions' requirement that "no protected person may be punished for an offense he or she has not personally committed. Collective penalties and likewise all measures of intimidation or of terrorism are prohibited."
The convention also bans reprisals against civilians under occupation and their property.
Pillay urged Israel to ease restrictions immediately "with a view to the complete lifting of the blockade and other restrictions."
Pillay told the Israeli government to "stop its expansion of settlements, which are illegal." She called for Israelis and Palestinians to receive building permits "in a nondiscriminatory manner" in East Jerusalem and the West Bank.
Leshno-Yaar dismissed Pillay's comments on settlements as having nothing to do with the supposed subject of the report: Israel's invasion of Gaza following Hamas rocket attacks on Israel.
Pillay's report is expected be debated next month by the 47-nation Human Rights Council, which also will weigh a parallel investigation into alleged war crimes in the Gaza conflict.