Benjamin Netanyahu, the Israeli prime minister, has refused to recognise the UN resolution demanding the halt of settlement activity by Israel on occupied Palestinian territory.
The resolution was adopted with 14 votes in favour after it was put forward at the 15-member Security Council for a vote on Friday by New Zealand, Malaysia, Venezuela and Senegal.
The US decided to abstain from voting.
The decision came a day after Egypt withdrew it under pressure from Israel and Donald Trump, the US president-elect.
In addition to calling it "shameful", Israel also recalled its ambassador to New Zealand and Senegal for their role in the passing of the resolution.
"Israel rejects this shameful anti-Israel resolution at the UN and will not abide by its terms," said Netanyahu.
"At a time when the Security Council does nothing to stop the slaughter of half-a-million people in Syria, it disgracefully gangs up on the one true democracy in the Middle East, Israel, and calls the Western Wall 'occupied territory'."
Netanyahu instructed on Saturday Israel's foreign ministry to end all aid programmes to Senegal and to cancel a planned visit to Israel by the Senegalese foreign minister.
Murray McCully, New Zealand's foreign minister, said the decision should have "not come as a surprise to anyone and we look forward to continuing to engage constructively with all parties on this issue.
"We have been very open about our view that the [Security Council] should be doing more to support the Middle East peace process and the position we adopted today is totally in line with our long-established policy on the Palestinian question."
Malaysia and Venezuela do not have diplomatic relations with Israel.
The resolution demands "Israel immediately and completely cease all settlement activities in the occupied Palestinian territory, including East Jerusalem".
Around 430,000 Israeli settlers currently live in the West Bank and a further 200,000 Israelis live in East Jerusalem, which the Palestinians see as the capital of their future state.
Israeli settlements are seen as a major stumbling block to peace efforts as they are built on land the Palestinians see as part of their future state.
The UN maintains that settlements are illegal, but UN officials have reported a surge in construction over the past months.
Israel and Trump had called on the US to veto the measure, but it ended up abstaining.
But after the vote in favour of the resolution, Trump vowed to change things at the UN when he takes over the White House next month.
It is the first resolution the Security Council has adopted on Israel and the Palestinians in nearly eight years.
Source: News agencies