Transport for London is facing criticism over its sponsorship deal with Emirates airline for a major cable car project in the capital.
Details of the contract show that TfL must abide by United Arab Emirates rules on having no ties to Israel or Israeli businesses.
Amir Ofek, spokesman at the Israeli Embassy in London, said the case raised "serious concerns".
Zionist Federation chairman Paul Charney said: "This sets a dangerous precedent, effectively allowing UAE money to dictate government policy through commercial contracts.
"Bilateral trade has doubled over the past year, making Israel one of Britain's key trading partners. I'm certain that this contractual exclusion would not benefit the UK in the long run.
"I call on TfL to urgently discuss this matter with foreign and trade ministers and reconsider this agreement before any lasting damage is done.”
Board of Deputies vice-president Jonathan Arkush said the "conflicting persons" clause "is effectively aimed solely at Israel, and will cause the Jewish community considerable concern".
TfL revealed the details following a Freedom of Information request from the MayorWatch website.
The contract highlights the obligations facing both its subsidiary company - Docklands Light Railway Limited – and Emirates.
A section makes reference to “conflicting persons”, described as any “competitor” of Emirates, or “any person who is a national of, or who is registered, incorporated, established or whose principal place of business is in a country with which the United Arab Emirates does not…maintain diplomatic relations”.
The UAE has no diplomatic relations with Israel.
The Emirates Air Line connects the Docklands area on the north bank of the Thames close to the ExCeL conference centre, with Greenwich on the south bank near the O2. It opened in June last year ahead of the Olympics and was praised by London Mayor Boris Johnson.
The sponsorship deal is worth £36 million over 10 years. The cable car receives further funding from the Greater London Authority, acting on behalf of the Department for Communities and Local Government.
The Dubai-based airline’s name was also incorporated into the names of two tube stations as part of the deal.
Transport for London operates the capital’s transport network, including tubes, buses and trams, and is partly-funded by government grants.
Danny Price, TfL’s Head of the Emirates Air Line, said: “It is factually incorrect to suggest that the contract we have with Emirates constrains TfL from entering any contracts with any other body or organisation of our choosing.
"It is to be expected that a sponsorship contract would include a clause to ensure that an organisation cannot simply introduce someone else that cuts across the commercial interests of a main sponsor.
"This is standard practice and simply means that, if we were to sell the Emirates Air Line to someone else, then Emirates would have the option to withdraw their sponsorship. Moreover, we have no plans to sell the Emirates Air Line.
“Nothing in the contract prevents the expression of opinion about the scheme. We would always expect our spokespeople to base their statements upon facts, and would therefore be able to offer whatever assessment of the scheme we saw fit.”
Mr Johnson has yet to comment on the revelations about the deal.