Homes, schools, drainage systems and roads are in urgent need of repair, but instead of work being allowed, families are being forced to live in tents and do not have access to clean water.
Restrictions on the use of land for agriculture have left thousands of Palestinian children without enough food and many are becoming ill as a result, the study found.
Conditions in Area C have reached "crisis point", the charity said, with 79 per cent of the communities surveyed lacking sufficient food - a greater proportion than in blockaded Gaza, where the figure is 61 per cent.
The lack of proper nutrition is having a major impact on the health of children growing up in the area, with 44 per cent of those surveyed for the study suffering from diarrhoea, the world's biggest killer of children under the age of five.
Many children living in such communities are showing signs of stunted growth, with the figure running at more than double Gaza's rate, and more than one in ten children surveyed for the study were found to be underweight.
The report says that for many Palestinians, international humanitarian assistance is far harder to access in the West Bank than in Gaza, with almost half the households surveyed in Area C reporting that they had no access to foreign aid assistance.
Save the Children warned that with the blockade of Gaza dominating headlines in recent months, the international community risked forgetting the fate of the poorest communities in the West Bank.
"The international community has rightly focused its attention on the suffering of families in Gaza but the plight of children in Area C must not be overlooked," Salam Kanaan, Save the Children's director in the occupied Palestinian Territories, said.
"Palestinians in the West Bank are widely thought to enjoy a higher standard of living but tragically many families, particularly in Bedouin and herder communities, actually suffer significantly higher levels of malnutrition and poverty."
The organisation called for Israel to immediately cease home demolitions and land confiscations in the West Bank and said the Palestinian authority should take "urgent action" to develop services and improve food security in Area C.
"Palestinian children cannot wait for the stalled peace talks between the Palestinian Authority, Israel, and the United States to find solutions to this crisis," Kanaan said.
Pockets of poverty
Cairo Arafat helped devise the Palestinian Authority's action plan for children before starting part-time work with Save the Children, and is now a spokesperson for Palestinian Authority. She told Al Jazeera the figures in the report did not reflect the conditions in the West Bank as a whole, but were still a major cause for concern.
"The overall conditions, if you look at health indicators and education indicators, are better than what is normal for the reigion," she said.
"The problem is we are beginning to see a regression."
The West Bank had "pockets of poverty," she said, that left around around 10 per cent of the 240,000 children in the territory at risk of ill-health.
"There are certain parts of the West Bank were the situation is much worse than in Gaza, with a lack of access to water and shelter," she said.
Arafat said that the Palestinian National Authority (PNA) was attempting to tackle the issue in the face of "excessive" obstruction from the Israeli authorities, particularly in areas near settlements and close to the separation barrier built by the Israeli military.
"The PNA is investing in a number of different programs in Area C and near where the wall is being built to improve the situation," she said.
"But there are certain areas where the Israelis won't allow infrastructure to be built."