Mahmoud Abbas, the Palestinian leader, has submitted a formal proposal to the United Nations for Palestinian statehood, a bid that is expected to fail.

In an address to the UN General Assembly in New York on Friday he said the Palestinian people deserved "their freedom and independence".

"The time has come for my courageous and proud people, after decades of displacement and colonial occupation and ceaseless suffering, to live like other peoples of the earth, free in a sovereign and independent homeland," he said.

He added: "My people desire to exercise their right to enjoy a normal life like the rest of humanity. They believe what the great poet Mahmoud Darwish said: Standing here, staying here, permanent here, eternal here, and we have one goal, one, one: to be."

"We extend our hands to the Israeli government to the Israeli people for peace making, I say to them let us urgently build together a future for our children where they can enjoy freedom, security and prosperity," he said.

He told the UN that primary cause for the failure of the peace process was the building of Israeli settlements on what he said was Palestinian land, in breach of international law and UN resolutions.

Abbas said his efforts were not aimed at isolating Israel or delegitimising it. "The only aim is to delegitimise the settlement activities, the occupation and apartheid," he said.

"It [Israel] frantically continues to intensify building settlements on the territory of the future state of Palestine," he said. "Settlement activities embody colonial military occupation of the land of the Palestine people."

His request seeks recognition based on the pre-1967 borders including the West Bank, East Jerusalem and Gaza.

The United Nations Security Council will meet on Monday to discuss the application for statehood. The United States is expected to veto any move if it comes to a vote.

There are fears a rejection by world leaders could lead to a "second intifada" in the occupied territories. In a sign of flaring tension in the region, Israeli forces shot dead a Palestinian in the West Bank just hours before Abbas addressed the UN, according to the Reuters news agency. Palestinians also gathered in the city of Ramallah ahead of the UN vote on the issue.

Israeli prime minister Benjamin Netanyahu said he extended his hand to the Palestinian people "with whom we seek a just and lasting peace". But he said the time was not right for a Palestinian state.

"Israel wants peace with a Palestinian state but the Palestinians want a state without peace," he told the General Assembly. "You shouldn't let that happen."

Netanyahu said Israel and Palestine had to stop "negotiating about negotiations" and "get on with it".

"We've just flown thousands of miles to New York. now were in the same city. we're in same building. So lets meet here today. in the UN," he said.

US President Barack Obama has already told Abbas that Washington will exercise its veto to block the proposed move.

Benjamin Netanyahu, the Israeli Prime Minister, has also expressed his intention to foil the Palestinian bid and is expected to make an address to the General Assembly against the move.

According to a senior Palestinian official speaking to the AP news agency, the statehood requests an immediate consideration from the UN Security Council.

French President Nicolas Sarkozy has urged a compromise on the bid, suggesting Palestinians be granted enhanced status to the UN as a non-member state to allow a clear timeline for talks.

"Why not envisage offering Palestine the status of United Nations observer state? This would be an important step forward," Sarkozy said.

"Most important, it would mean emerging from a state of immobility that favours only the extremists. We would be restoring hope by marking progress towards the final status."

The written request for statehood will be presented in writing to UN secretary general Ban Ki-moon.

To be successful the request would first have to win approval of two-thirds of the 193-member General Assembly. The motion would then pass to the Security Council.

To pass, the bid would then require nine out of 15 members to approve, plus no vetoes from any of the permanent members.

The observer state status suggested by Sarkozy requires only a straight majority in the General Assembly and would not be subject to an American veto.

Tony Blair has criticised the Palestinian push for statehood at the UN as "deeply confrontational".

The Middle East envoy for the Quartet made up of the UN, the US, the EU, and Russia, was speaking to the BBC's World at One radio programme on Friday afternoon.

"You can pass whatever resolution you like at the United Nations or the Security Council, it doesn't actually deliver you a state on the ground in the West Bank and Gaza, and if you don't have a negotiation, whatever you do at the UN is going to be deeply confrontational," he said.