The report said that more than 1.1 million people, about 80 percent of Gaza's residents, are now dependent on food aid, as opposed to 63 percent in 2006. Unemployment stands around 40 percent, and nearly 70 percent of the 110,000 workers employed in the private sector have lost their jobs.
It also said that hospitals are suffering from power cuts of up to 12 hours a day, and the water and sewage systems were close to collapse, with 10-12 million gallons of sewage pouring into the sea daily.
The report follows strident international condemnation of Israel after it struck hard against Palestinian militants in Gaza, killing more than 120 in the past week, including many civilians, after Palestinians militants escalated their daily rocket fire at Israel.
The rockets have killed 13 people, wounded dozens more, traumatized thousands and caused millions of dollars in damage in seven years of fighting. Last week longer-range rockets reached Ashkelon, a city of 120,000 people, about 11 miles north of Gaza, prompting the harsh Israeli response.
"Israel has the right and obligation to protect its citizens, but as the occupying power in Gaza it also has a legal duty to ensure that Gazans have access to food, clean water, electricity and medical care," said Amnesty International UK Director Kate Allen, one of groups behind the report. "Punishing the entire Gazan population by denying them these basic human rights is utterly indefensible. The current situation is man-made and must be reversed."
Israel removed all 21 settlements and withdrew its forces from Gaza in 2005. Israel maintains that ended its occupation, but rights groups say that since Israel still controls Gaza's land, sea and air access, it is still the occupier.
After Hamas militants seized control of Gaza in June, Israel closed its crossings, allowing only shipments of vital goods into Gaza.
The 16-page report titled "The Gaza Strip: A Humanitarian Implosion" - sponsored by Amnesty, along with CARE International UK, CAFOD, Christian Aid, Medecins du Monde UK, Oxfam, Save the Children UK and Trocaire - calls on the British government to exert greater pressure on Israel and to reverse its policy of not negotiating with Gaza's Hamas rulers.
Israel and the West shun Hamas and label it a terrorist organization. Hamas does not accept the presence of a Jewish state in an Islamic Middle East and has sent dozens of suicide bombers into Israel, most recently a month ago.
The report adds that it considers Israel's blockade of Gaza as unacceptable and illegal collective punishment.
Israel's Defense Ministry rejected the report, saying it was misdirected.
"The main responsibility for events in Gaza - since the withdrawal of Israel from the territory and the uprooting of the settlements there - is the Hamas organization, to which all complaints should be addressed," read a statement by a spokesman, Maj. Peter Lerner.
The Defense Ministry also said medicines and medical equipment are shipped into Gaza with no limitation. On Wednesday, a typical day, the military said it allowed 69 truckloads of supplies into Gaza, including basic food and baby formula to cross and the military said that on Thursday a further 160 vehicles trucked in more foodstuffs, including meat, fish and grain .
Israel's Foreign Ministry said in a statement that it respects the activity of the NGOs but that their criticism should be directed elsewhere.
"Unfortunately, and not for the first time, these organizations fail to face the reality and sequence of events leading to the deteriorating situation in the southern regions of Israel, as well as in the Gaza Strip," the statement read. "If only the Palestinians chose to cease their pointless and indiscriminate firing of rockets and missiles against hundreds of thousands of Israeli civilians, the entire region would return to a normal routine in which Palestinians and Israelis could once again enjoy their daily lives."
This week NGO Monitor, a Jerusalem-based watchdog, called on human rights groups to end what it called their political use of international law. It cited an Amnesty International press release that it said made unsubstantiated accusations that Israeli responses "are being carried out with reckless disregard for civilian life".
"NGOs and human rights groups must end their irresponsible and immoral use of legal rhetoric." said Gerald Steinberg, Executive Director of NGO Monitor. "False claims of disproportionate force and collective punishment by Amnesty International and Human Rights Watch make a mockery of international law."