The Union of Jewish Students has said it is "disappointed and surprised" after the National Union of Students launched a campaign challenging the practices of two Israeli-linked companies.
NUS urged students to encourage their universities to consider cancelling contracts with Veolia and Eden Springs.
French waste-management company Veolia has repeatedly been targeted by anti-Israel groups over its links to the Jerusalem light rail project. Eden Springs water company is based in the Israeli settlement of Katzrin in the Golan Heights.
NUS said it hoped to meet executives from both companies as part of a new "constructive engagement" policy which will see the union tackle practices it disagrees with while stopping short of a full boycott.
The union's online explanation of the move highlights Palestinian activists' appeals to students' unions and likens them to "the South African anti-apartheid movement".
Dannie Grufferty, NUS society and citizenship vice-president said: "This call is aimed solely at two companies that operate in ways that have been condemned by the UN. NUS believes in a two-state solution for Israel and Palestine and that position has not changed."
Dan Sheldon, UJS campaigns director, said: "It is disappointing and surprising to see NUS issue this statement. Issues around East Jerusalem and the Golan Heights are complex, and NUS has a key role to play in promoting education and dialogue on this. NUS should be building bridges not boycotts."
It is NUS's latest anti-Israel move. Its National Executive Council passed a motion in December demanding King's College London cease participation in a research project with Israeli cosmetics company Ahava.
NUS president Liam Burns intervened personally, writing to the King's principal Richard Trainor to encourage "urgent reconsideration" of the college's involvement in a European Union research project which includes Ahava.
Mr Burns said Ahava was "deeply complicit with violations of international law, specifically concerning declaration of their products' origins within occupied Palestinian territories".
At December's UJS conference, Mr Burns told Jewish students that community criticism of the vehement anti-Israel policy adopted by NUS last May had "done more harm than good".
The plans to send students on flotillas and build links with the Hamas-backed Islamic University of Gaza were scrapped in September.
Speaking at the conference, Mr Burns said he could "not tell students' unions what to do" when it came to positions on the Israel-Palestinian conflict.