The UK has threatened to expel one Israeli diplomat for every British diplomat forced to leave Israel as a result of Israel’s decision to close the UK consulate in East Jerusalem later this week.

This could means as many as 27 Israeli diplomats being expelled from the UK, a step that would arguably mark the lowest point in British-Israeli diplomatic relations since the formation of the state of Israel.

The mass expulsion threat – more reminiscent of British-Russian diplomatic relations – was first reported by the Israeli newspaper Ynet, citing a message sent to Israeli officials. The UK Foreign Office said it would not comment on speculation, rather than denying the report outright.

Israel has threatened to close the UK consulate in East Jerusalem in protest at the UK decision to ban trade with goods from illegal Israeli settlements in the occupied West Bank and to impose sanctions on British firms that aid support or facilitate the construction of further illegal settlements.

The Foreign Office has been advised informally by the former UK attorney general Dominic Grieve that Israel is acting unlawfully if it closes the consulate on the basis it is sited in East Jerusalem, which is recognised by the United Nations and most of its members, including the UK, as being occupied Palestinian territory.

Israel’s foreign minister, Gideon Sa’ar, has said that Britain’s ‌decision to impose sanctions was “morally distorted” and accused Britain’s ruling Labour party of being hostile towards the country.

The consulate, which Israel’s foreign ministry has said will close on Thursday, is separate from the UK embassy based in Tel Aviv and has a distinct diplomatic role, covering East Jerusalem, the rest of the West Bank and Gaza. It is located in the Sheikh Jarrah neighbourhood of East ​Jerusalem.

An Israeli diplomatic sources said: “There is no reason for us to respond to speculation about decisions that other countries may or may not take in the future.

“We have already demonstrated that any step taken against Israel will be met with an appropriate response, and that will continue to be the case.”

The UK national security adviser, Jonathan Powell, travelled to Jerusalem last week in an effort to persuade the Israeli government to rescind or defer the closure of the consulate but the talks failed.

It has been reported that Powell opposed the decision of the UK foreign secretary, Ed Miliband, to press ahead with the settlement trade ban decision, fearing that it might play to the advantage of the Israeli prime minister, Benjamin Netanyahu, in the national election on 27 October as he seeks bolster his case that only his brand of leadership can bring Israel security. There is no evidence as yet that the UK decision has yet played very big in the campaign, but tit-for-tat expulsion of diplomats may make the issue more high profile.

The ‌incident highlighted growing frustration among Israel’s longtime allies over its settlements in the occupied West Bank, viewed by much of the world as illegal under international law. In his statement to the UK parliament, Milband said settler terrorists, supported by Netanyahu’s, government are committing ethnic cleansing in the West Bank, Israel disputes this.

Israel has also said it is to revoke the credentials of Dutch diplomats from the country’s mission to Palestine, in response to the Netherlands’ ban on imports from illegal Israeli settlements. Israel’s military occupation of the West Bank, East Jerusalem and Gaza means diplomats need Israeli accreditation to operate in Palestine. The decision also in effect bars them from Israel-controlled East Jerusalem.

France and Canada, which also joined the UK in the settlement trade ban, have not had action taken against them.

Miliband received a very warm reception at the UK Labour party conference last week during a speech in which he highlighted his decision to get tough with Israel over illegal settlements.

UK-Israeli relations have deteriorated steadily during the war in Gaza begun by Hamas’s 7 October 2023 massacre of Israelis as the UK became increasingly critical of the way in which Netanyahu seemed prepared to tolerate the death of thousands of Palestinians in a bid to render Hamas inoperative, a task both the Conservative and Labour governments thought was unachievable through his methods.

The UK has rescinded a large number of arms export licences to Israel as a result and Miliband has spoken of evidence of war crimes in Gaza. He has declined to accuse Israel of genocide on the grounds that he believes this is a matter for international courts alone to determine.