The blockade of Gaza has not weakened Hamas, Mr Holmes said
The UN's top humanitarian official, John Holmes, has criticised Israel for linking the 2006 capture of an Israeli soldier to the blockade of Gaza.
Mr Holmes also said Israeli actions in East Jerusalem and the West Bank, including expanding settlements, was counter to the peace process.
He urged a relaxation of the blockade, warning Gaza was "de-developing".
It came as Israel ordered the army to seal off the West Bank for 48 hours until midnight on Saturday.
An army spokesman said the move had been made because of heightened tensions in Jerusalem.
Meanwhile, Israeli aircraft hit two targets in southern Gaza Strip early on Friday. Witnesses reported seeing several injured people.
The developments follow a visit to Israel and the West Bank by US Vice-President Joe Biden, during which the US and Palestinians criticised Israel's plans to build more Jewish homes in the Arab east of the city.
The Israeli soldier, Gilad Shalit, was captured by Palestinian militants nearly four years ago near the border with Gaza.
Mr Holmes, of the UN Office for the Co-ordination of Humanitarian Affairs, was speaking at the UN after visiting Israel and the Palestinian territories earlier this month.
"Obviously we've called for the release of Cpl Shalit, and that he should be treated in accordance to the Geneva conventions," Mr Holmes said.
"But the link between that and the fate of 1.5 million Palestinians in Gaza does not seem to us a reasonable one."
He said the blockade of Gaza had not weakened Hamas, the militant Islamist movement which controls the territory.
Mr Holmes told journalists there had been some progress: the Israelis had allowed into Gaza goods such as glass to fix broken windows.
But, he said, in general Gaza was being pushed backwards, or "de-developing", because it was not possible to repair war damage and revive the economy.
Mr Holmes said the situation in Gaza was so bad that even though smuggling tunnels to Egypt were fostering a "gangster economy", the situation would become unsustainable if they were blocked.
The tunnels are a conduit for badly needed commercial goods, including food and medicine, but are also widely believed to be used for smuggling cash and weapons to Hamas.
Egypt, which helps maintain the blockade and opens its border with Gaza only occasionally, is reinforcing its Gaza border barrier with underground metal plates in an attempt to block the tunnels.
The UN and a number of international humanitarian groups warned in January that the blockade was putting residents' health at risk, the UN and aid groups have warned.
Israel and Egypt deny entry to all but basic humanitarian supplies, in order to prevent Gaza's Hamas rulers firing rockets at Israel, they say.
Mr Holmes spoke as Mr Biden was winding down his trip to the Middle East, the highest ranking Obama administration official yet to go to Israel and the West Bank.
'No better friend'
On Tuesday, the Israeli interior ministry said that the Jerusalem authorities had approved the expansion of Jewish homes in East Jerusalem.
Mr Biden said the decision "undermined the trust required for productive negotiations" and warranted his unequivocal condemnation.
But he also said the United States had "no better friend than Israel" and urged peace talks to resume without delay.
Close to 500,000 Jews live in more than 100 settlements built since Israel's 1967 occupation of the West Bank and East Jerusalem.
They are illegal under international law, although Israel disputes this.