A tournament kicking off the campaign at Kiryat Shmona’s stadium last week saw 180 youngsters play alongside professional footballers, broadcasters and politicians.
A mixed team of Jewish and Arab children drew 1-1 in a match against a squad from the embassy.
British Ambassador Matthew Gould worked with former FA chief executive David Bernstein to develop the plan.
Mr Gould said: “Football is one of the things that ties Israel and Britain together. So it is natural that Britain should support a football project in Israel that will bring together Arab and Jewish children.
“There can be no better way of breaking down barriers and challenging stereotypes.”