First, don't even attempt it if that concrete is damp on the other side, IE if it's an exterior foundation wall. Next, your mortar joints may be a problem down the road. If they crack, your finish will crack. If you are hell bent on doing this, skim the entire block surface with Concrete Fill (and imbed sheets of fibreglass mesh for insurance), then skim with regular drywall compound.
My advice.. laminate 1/2 drywall to the blocks. You can use Taping Compound as adhesive.