Israel's policy of denying building permits to Arab landowners in the West Bank and East Jerusalem, and of demolishing Arab houses constructed without permits, has left thousands of people homeless and severely impeded Palestinian development, according to a new report by the human rights group Amnesty International.

The report by the London-based organization criticizes the government of Prime Minister Ehud Barak, which took power in July, for maintaining a policy of bulldozing homes that have been built without a permit.

But according to figures compiled by other human rights organizations and the Israeli government, there has been a sharp drop in the number of Palestinian houses demolished since Barak replaced the right-wing prime minister Binyamin Netanyahu.

The Palestinians have long contested the destruction of homes by Israeli bulldozers, and the practice has been criticized by U.S. and European governments.

Amnesty International, calling the demolitions "a grave human rights violation," urged the United States to pressure the Jewish state to change its policies. The United States provides Israel with nearly $3 billion annually in civilian and military aid.

"The Israeli policy has been based on discrimination," said the report, entitled "Demolition and Dispossession: The Destruction of Palestinian Homes."

"Palestinians are targeted for no other reason than that they are Palestinians," it said.

Israel says its land-use practices in the West Bank are enshrined in law and are not discriminatory, and that the majority of houses deemed illegal are never demolished.

"We know that behind every [house] destruction are families," said Shlomo Dror, spokesman for Israel's military occupation authorities in the West Bank and Gaza Strip. "We're speaking of thousands of houses built without licenses. How many did we destroy of that? Dozens. We are trying all the time not to go against the people."

Dror said that while there has been no change in Israel's policy, officials have been instructed by Barak to take special care in reviewing the circumstances of each house recommended for demolition. Barak, who also serves as defense minister, is required in that capacity to sign house demolition orders for the Israeli-occupied West Bank.

According to Israeli government figures, as well as those supplied by Israeli and Palestinian human rights groups, there has been a significant drop in Arab home demolitions, particularly in the West Bank, where 1.7 million Palestinians live. In the West Bank, about 100 homes have been destroyed since Jan. 1, most of them uninhabited, down from more than 200 last year, according to government figures.