China has told Israel it will not allow migrant builders to work on settlements in the occupied West Bank, a senior Israeli government official said on Monday.

Prime Minister Benjamin Netanyahu pledged during his reelection campaign to step up settlement construction, and cabinet ministers in his new government have called for more building in the occupied territories, which is seen as an obstacle to peace with the Palestinians.

And Israel is hoping to bring in thousands of foreign workers to accelerate the pace of the construction across the country and in the West Bank, media reported.

"We are negotiating with China for an agreement on the arrival of thousands of additional workers," the official told AFP, requesting anonymity.

"For the moment, the talks are stumbling over several problems, including the employment of these immigrants in settlements in Judea and Samaria," he said in reference to the West Bank.

"Beijing is demanding that we ensure there are no workers in this region," he added, without elaborating.

There has been no immediate comment from Beijing, but China's position could undermine lengthy negotiations between the two countries aimed at striking a labour agreement.

Under the deal the Israeli government would be responsible for bringing foreigners into the country to work in the construction sector, Haaretz newspaper reported on Sunday.

"The agreement would replace the current arrangement, in which private companies contract directly with Chinese firms that supply the labour, an arrangement that has resulted in allegations of serious violations of labour laws," the paper said.

- Growing boycott calls -

The Israeli official denied that China's decision had anything to do with growing calls for an economic and cultural boycott of the Jewish state.

"It is more likely linked to Beijing's diplomatic position that supports the creation of a Palestinian state and opposes Israel's presence" on occupied Palestinian territory, he said.

The international community regards all Israeli construction on Palestinian land seized during the 1967 Six-Day War as illegal.

Last week a row erupted between Israel and France's Orange group, after the chief executive of the telecoms giant, Stephane Richard, said his firm was planning to withdraw its brand from Israel.

His comments came just four weeks after the publication of a report accusing Orange of indirectly supporting settlement activity through its relationship with Partner Communications.

Israel reacted furiously, accusing Richard of succumbing to pressure from the Palestinian-led boycott movement, known as Boycott, Divestment and Sanctions.

The Orange row came after Britain's National Union of Students voted to affiliate itself with the BDS movement.

And on May 29, Israel narrowly avoided expulsion from FIFA after the Palestinians withdrew a resolution calling on world football's governing body to ban their Israeli counterparts.

Settlement construction makes up around 3 percent of all of Israel's building, according to the Central Bureau of Statistics.

Last year the government decided to increase the number of foreign builders to 8,000 and later to 15,000 to boost construction and reduce property prices which have soared in the last few years, Haaretz said.

Israel has bilateral agreements with Bulgaria, Moldavia and Romania for the employment of builders, and with Thailand and Sri Lanka for migrant farmhands.