The government’s decision to suspend a series of arms export licences to Israel if hostilities resume in Gaza was the cause of a major row between the coalition parties, the JC understands.

Business Secretary Vince Cable holds sole responsibility for issuing arms licences, with legislation stating that even the Prime Minister cannot overrule the Secretary of State’s decision.

Mr Cable and his Liberal Democrat colleagues favoured a ban on all arms to Israel following the Israel Defence Force’s operation in Gaza.

While Mr Cameron and the Conservatives opposed that stance, they were powerless to stop Mr Cable exercising his unilateral power. The only option available would have been to sack Mr Cable and risk the collapse of the government.

The JC understands a series of disagreements have taken place within the business department and government with efforts made by ministers and others to talk Mr Cable out of placing a full ban on exports to Israel.

On Tuesday evening the Business Secretary announced that the department had concluded its review of licences and found that the vast majority of current exports to Israel could not be used by the IDF in Gaza.

But Mr Cable also said that 12 licences had been identified which would be suspended “as a precautionary step” if “significant hostilities” resume between Israel and Hamas.

The decision leaves the government facing the possibility of putting an arms embargo on Israel if Hamas launches rocket attacks, the ceasefire breaks down and Israel takes defensive action.

An Israeli embassy spokesman said: “We share the UK's hope that the current ceasefire will continue and lead to a long term solution.

"At the same time, should Hamas violate the current ceasefire, as it has previous ceasefires, Israel maintains the right to defend itself, a right which has been recognised and supported by the UK leadership.

“Israel regrets calls to cancel or freeze export licenses, or to condition them on a non-recurrence of hostilities.

"Political decisions of this nature do not reflect Hamas' responsibility as a serial violator of past ceasefires, and are unlikely to contribute to the goal of negotiating a sustainable solution to the current conflict.”