Dozens of Israeli reservists with an elite intelligence unit have refused to take part in spying activities on Palestinians, denouncing the military's intrusive security policies in an open letter to Prime Minister Benjamin Netanyahu and armed forces chiefs.

Extracts from the letter were published by Ynet newspaper, signed by 43 reserve soldiers and officers of Israel's largest signals intelligence gathering unit, known as Unit 8200 or Yehida Shmoneh-Matayim in Hebrew.

"We refuse to take part in actions against Palestinians and refuse to continue serving as a tool for deepening military rule in the occupied territories," the servicemen wrote.

"The Palestinian population is subject to military rule, completely exposed to espionage and to being tracked by Israeli intelligence."

The signatories said that, different to Israeli citizens who can be spied upon only with a court's authorisation, Palestinians were subject to intrusive monitoring without oversight, "regardless if they are connected to violence or not."

"Intelligence allows ongoing control over millions of people, thorough and intrusive monitoring and invasion into most aspects of life," the letter read.

"All of this does not allow for normal living, fuels more violence and puts off any end to the conflict."

The signatories, whose names were not published, said that part of the information gathered was used to set up air strikes that often resulted in civilian casualties.

Other data was used to turn Palestinians against one another with the final aim of preserving control over the West Bank, they said.

"We are unable, morally, to serve in such a system which harms the rights of millions of people," read the letter, which was dismissed by the military as the publicity stunt of a fringe group.

A spokesperson for Israel Defense Forces (IDF) responded by saying that ethical standards abided to by Unit 8200 personnel were "without rival in the intelligence community in Israel or the world".

"Unit 8200 is dedicated to gathering intelligence that allows Israeli Security forces to carry out their mission, which is to defend Israeli civilians," an IDF spokesman told the Times of Israel.

"Those who serve in the unit undergo a thorough screening process and intense training which is unmatched by any of the world's intelligence agencies.

"Throughout the training, a special emphasis is placed on morality, ethics, and proper procedure. Soldiers and officers in the unit act in accordance with their training and remain under the strict supervision of high ranking officers."