Correspondents say it has also left ordinary Palestinians desperate and added to the explosive mood by radicalising many who are stopped from getting to work and left with nothing to do.
As the violence continues, there are members of the new Israeli Government who argue that even more severe measures need to be taken. Some are proposing the re-occupation of Palestinian areas.
Other coalition members are arguing that the blockade policy as a whole needs to be reviewed.
Whatever the decision, Mr Sharon will be under ever increasing pressure to end the uprising as he promised to do before his landslide victory in last month's election.
The Israeli authorities say the blockade is in place for security reasons.
In one instance tightened the restrictions on Ramallah because officials believed an attack against Israelis was being planned.
The action taken in Ramallah included a relatively new tactic - that of building a trench around a settlement large and deep enough to stop a car.
Each new measure in the blockade brings further clashes
Thousands living in the vicinity of Ramallah could not get to the town or the university as, like the Gaza Strip, it was almost completely cut off from the outside world.
The city of Jericho has also been encircled by a trench designed to prevent Palestinian motorists from evading Israeli checkpoints.
In the West Bank, the Israeli army has used road blocks to prevent Palestinians moving between the patchwork of areas administered by the Palestinian Authority.
All passes, that would have normally allowed Palestinians to move through Israeli controlled areas and into Israel, were revoked.
Reports say that Palestinians were unable to get to the hospital in a nearby Palestinian town because of the road blocks.
New tactic - trenches around some towns
Economic activity and farming have been severely affected, leading to enforced idleness among Palestinians and food shortages. Farmers are often no allowed to get to their farms or take produce to market.
'Siege of Gaza'
Gaza is meant to be under Palestinian administration - except for several large settlement blocks and all border crossings.
Under the blockade it is almost entirely cut off from the outside world. It is also cut in half, preventing Palestinians from moving from the north to the south of the strip.
A central checkpoint through which all traffic is channelled is regularly closed and the passes needed to go through the checkpoint are very hard to get.
Similarly, Gaza's airport and port have been closed to Palestinians for about 60% of the time since the start of the uprising.
The blockade has radicalised many Palestinians
Attacks on Israeli settlements in the strip and on access roads have increased the Israeli army presence in the area massively.
In Gaza and elsewhere, bulidings, trees and crops have been levelled to destroy any cover that might hide Palestinians attacks.
These measures are seen as collective punishment by the Palestinians and legitimate security measures as by Israelis.
The effect of the blockade and related measures has ruined the economy.
It was already fragile as a result of a combination of high unemployment, inefficiency and endemic corruption.
Thousands of Palestinians who would normally work in Israel cannot get to their work
Palestinian farmers are often stopped from taking their produce to market
According to a United Nations report in December, unemployment has risen from 12% to 40%, and one in three Palestinians are living below the poverty line - that is to say they live on $2 a day or less.
The crisis is estimated to have cost the economy $1bn, leaving the Palestinian Authority with a $250m deficit.
Israel has added to the economic crisis by withholding taxes from import duties owed to the Palestinians, totalling about $50m.
Aid agencies working in Gaza have also scaled back or cancelled some operations because of their inability to get in essential supplies such as medicines.