The punitive measure was ordered after a rocket hit southern Israel on Tuesday night, provoking an airstrike from the Jewish state, neither of which caused any injuries.
It was the third incident in recent days to lead Israel to cancel part of its measures easing restrictions on movement for Palestinians from Gaza and the occupied West Bank for the Muslim holy month of Ramadan.
Gaza, ruled by Islamist movement Hamas and ravaged by three wars in the past six years, is under a blockade, with Israel maintaining strict control over the entry and exit of goods and people.
Part of the measures included allowing up to 800 Gazans to travel to Al-Aqsa for Friday prayers.
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Israel said yesterday it was revoking 500 such permits, with the cancellations applying to this week only. A spokeswoman for COGAT, the defence ministry unit that coordinates with Gaza, told AFP the move was "because of the rocket".
Some Gaza residents yesterday called the punitive measure unfair and said they had no control over the militants firing rockets.
"This is not our fault," said Rabaea Abu Halima, a resident of Beit Lahia in the northern Gaza Strip. "We do not want any rockets to be launched on Israel."
Ban "welcomes" Israel's measures to ease some restrictions on Palestinians, Under-Secretary-General for Political Affairs Jeffrey Feltman told the Security Council, adding that the UN chief "encourages Israel to sustain and expand these confidence-building measures".
But the defence ministry had said the easing of restrictions was conditional on a continued lull in violence, which was initially broken late Friday with the killing of an Israeli hiker in the West Bank.
That incident was followed by the stabbing of a policeman in east Jerusalem on Sunday.