Palestinians say the route of the wall has been set in such a way that it grabs land that could have been included in a future Palestinian state.
A report by Stop the Wall, a Palestinian coalition of NGOs opposed to the wall, said that in 2007 alone, Israel demolished more than 160 houses and appropriated more than 3,000 dunnums (3sq km) of land in the Palestinian West Bank in its construction of the wall.
The barrier is planned to be 790km long.
Diskin's comments come as Binyamin Netanyahu, the Israeli prime minister, faced renewed pressure from the US to halt Israel's settlement building activity.
Netanyahu was in Washington, his first visit there since taking office, for talks with Barack Obama, the US president.
He also held talks with John Kerry, chairman of the US Senate Foreign Relations Committee.
"I emphasised to the prime minister the importance of moving forward, especially in respect to the settlement issue," Kerry said after the meeting.
The building of Jewish settlements in the West Bank, illegal under international law, is widely seen as an impediment to peace.
Netanyahu, who heads a right-leaning coalition, has resisted calls to freeze the expansion of Jewish settlements.
Meanwhile, Israel carried out six overnight air raids in Gaza, targeting tunnels along the border between the Palestinian territory and Egypt.
Two metal workshops were reportedly hit and medical services said that four people were injured.
The attacks followed several hours after a rocket fired from the Palestinian territory struck inside an Israeli town.