The humanitarian crisis in the Gaza Strip is "getting worse by the day," International Development Secretary Douglas Alexander has warned.
He said inhabitants of the Palestinian enclave are now struggling to find medical supplies, fuel and clean water.
But Mr Alexander also said 2008 held "grounds for cautious optimism" in the Israeli-Palestinian peace process.
Also speaking on the Today programme, the Archbishop of Canterbury urged both sides to see each other's humanity.
Mr Alexander told the BBC4 programme: "As a direct result of the conflict that has existed for so many years, there are now very significant blocks on the ability of the Palestinian economy to grow and to prosper.
'Seeds of peace'
"In terms of medical supplies, there are now 157 essential medical items that are out of stock in Gaza. Medical equipment is breaking down. The hospitals and clinics are facing severe shortages of diesel coming across the border.
He continued: "So whether it's medical supplies, whether it's access to clean water - 15% of Gazans no longer have sufficient clean water - or whether it's access to food, there are real humanitarian difficulties in Gaza and they are getting worse by the day."
But Mr Alexander said there was still reason to believe "seeds of peace" had been planted in the Middle East.
What my visitors were saying was that grief and desperate loneliness are not political things, but human things 
He pointed to the recent Annapolis conference in America, an international donor's conference in which the UK pledged £240m in aid to Palestine, and a planned visit by US President George Bush in the new year, as signs of hope for the region.
Mr Alexander said: "So there are some grounds for cautious optimism that a peace process that has been fundamentally stuck for a number of years could now find a way forward, notwithstanding all of the manifest difficulties that we are aware of."
He was speaking as the Archbishop of Canterbury, Rowan Williams, used BBC Radio 4's Thought for the Day programme to appeal to people on either side of the Middle East divide
Dr Williams, described how he had received a visit from a Jewish mother who had lost a son, and an Arab Muslim man who had lost his brother, both of whom were travelling together to promote peace.
"It is only when we get to the humanity that we get beyond the sterility of historic racial and religious conflicts," he said.
"What my visitors were saying was that grief and desperate loneliness are not political things, but human things."
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