Yemen's Huthi rebels have gained even more ground over the past year, and the government resorted to corruption despite a humanitarian crisis, a UN report says.

The experts assessing UN sanctions on Yemen said that the Saudi-backed government "lost strategic territory to both the Huthis and the Southern Transitional Council," a secessionist group whose members late last year entered into a unity government.

"The government of Yemen is, in some cases, engaging in money laundering and corruption practices that adversely affect access to adequate food supplies for Yemenis, in violation of the right to food," said the report submitted to the Security Council and seen.

It pointed to $423 million that was "illegally transferred to traders" after being deposited with the government by oil-rich Saudi Arabia.

The report comes as US President Joe Biden's new administration moves to cut off military support for Saudi Arabia, believing its offensive against the Iranian-linked rebels has contributed to what the United Nations calls the world's worst humanitarian crisis.

The Huthis, who control the capital Sanaa, kept up their gains due to "the lack of a coherent strategy among anti-Huthi forces, demonstrated by infighting within them, and disagreements between their regional backers."

It pointed to how the United Arab Emirates, which backs the Saudi campaign against the Huthis, had also lent support to the Southern Transitional Council, which seeks to restore South Yemen's pre-1990 independence.

The Huthis have become the de facto government in much of Yemen, collecting taxes and state revenue, it said.

The panel estimated that the Huthis diverted at least $1.8 billion in 2019 that had been destined to salaries and basic services to pay for its operations.

Former US president Donald Trump's administration branded the Huthis as a terrorist group in its final days, pointing to links with adversary Iran.

The UN panel said: "An increasing body of evidence suggests that individuals or entities in the Islamic Republic of Iran supply significant volumes of weapons and components to the Huthis."

The Biden administration is reviewing the terror designation and has stopped the implementation of a ban on transactions with the Huthis after humanitarian groups warned that the move would hinder aid.

Yemen's six-year war has left tens of thousands dead and displaced millions, with more than 80 percent of the 29 million people depending on aid to survive.