Douglas Alexander has admitted that "very significant blocks" on the Gaza economy are making it difficult for the humanitarian situation to improve.
Speaking to the Today programme, the international development secretary said he felt that Palestinians' lives were not improving because of continued conflict in the region.
Although he remains hopeful of making progress in the new year, he has called for an end to the "very significant blocks on the ability of the Palestinian economy to grow and to prosper".
He also highlighted the lack of medical supplies available to the people of Gaza and hailed the importance of continued financial support for the area.
Mr Alexander pledged UK aid to the Palestinian Authority as part of a conference of donors in Paris last week.