British-Israeli relations hit new low after settlement proposal

Britain seemed to be on the verge of losing patience with Israel today, after a settlement expansion programme saw the UK  reportedly threaten to withdraw its ambassador.

The move, reported by Israeli newspaper Haaretz and other sources, would mark a new low in British-Israeli relations, but the fact it is even being spoken of shows how frayed tempers have become.

Downing Street insisted it was not contemplating removing its ambassador but confirmed Israeli ambassador Daniel Taub had been summoned to the Foreign Office for talks over the planned settlements.

Israel appeared to call the UK's bluff this afternoon, when Reuters reported officials in the country insisted they would not backtrack on the settlement expansion plan.

"Taub was summoned following the Israeli decisions to build 3,000 new housing units in East Jerusalem and the West Bank, to unfreeze planning in the area known as E1 and to withhold tax revenue from the Palestinian Authority," minister for the Middle East Alistair Burt said.

"I set out the depth of the UK's concern about these decisions and I called on the Israeli government to reverse them. The settlements plan in particular has the potential to alter the situation on the ground on a scale that threatens the viability of a two state solution.

"I also made clear that the strength of our reaction stems from our disappointment that the Israeli government has not heeded the calls that we and others had made for Israel to avoid reacting to the UN general assembly resolution in a way that undermines the Palestinian Authority or a return to talks."

Israel approved proposals to build 3,000 additional homes last week in the controversial E1 area of East Jerusalem. The move would cut off Palestinians off from the rest of the West Bank and make it almost impossible to create a viable Palestinian state.

UN secretary general Ban Ki-moon said the settlement would be an "almost fatal blow" to peace hopes.

The Israeli move comes after 138 member states at the UN voted to upgrade Palestinian membership of the world body. In response, Israel froze the transfer of taxes they collect on behalf of the Palestinian Authority.

Before it went as far as withdrawing its ambassador, Britain could also instigate several other measures, including the suspension of trade agreements, possibly by invoking human rights clauses.

The period marks an extremely dangerous moment for Israel which has never been so isolated on the world stage. The action in Gaza last month alienated many commentators and the UN vote saw it win precious little support, apart from the US.

Its latest authorisation of settlements has triggered much harsher criticism than usual from the international community.