The Department for the Environment, Food and Rural Affairs (Defra) has issued voluntary guidance that advises supermarkets to include more details of the origin of the produce: “Israeli settlement produce” or “Palestinian produce”.
Until now, food has been labeled “Produce of the West Bank”.
According to reports, Waitrose sells herbs grown in Israeli settlements but makes no distinction between Israelis and Palestinians, labeling them as “West Bank” produce.
Twenty seven Israeli firms operating in settlements exporting goods including fruit, vegetables and cosmetics to the UK have been identified.
Tesco, Sainsbury’s, Somerfield and John Lewis are also understood to sell their products.
European Union law requires a distinction to be made between goods originating in Israel and those from the occupied territories but many pro-Palestinian campaigners have complained that this is not complied with.
The move could increase the likelihood of a consumer boycott of goods identified as being manufactured in the settlements and the Government’s guidelines have already led to criticism from Israeli officials.
A spokeswoman for Israel’s foreign ministry says it is concerned that the guidelines could be seized upon by pro-boycott campaigners.
The UK Foreign Office says the guidelines are “emphatically not about calling for a boycott of Israel” but about allowing consumers “to choose for themselves what produce they buy”.
Almost half a million Jewish settlers live in the disputed territories in East Jerusalem and the West Bank.