The European Parliament has expressed its support for putting special labels on consumer goods produced in West Bank, East Jerusalem and Golan Heights settlements.
A total of 525 EU parliamentarians voted for the motion on Thursday; 70 voted against and 31 abstained.
Prime Minister Benjamin Netanyahu retorted: "The European Parliament decision is unjustified, it is just a perversion of justice and a distortion of reason, and I think that it also harms peace, it doesn't advance it."
Earlier this week, European Union foreign policy chief Federica Mogherini's statement this week that work was going ahead on labelling products manufactured in West Bank settlements caused more diplomatic tension between Israel and Europe.
Ms Mogherini was backed up by Jean Asselborn, the Foreign Minister of Luxembourg, which currently holds the rotating EU presidency.
The statements came in a period in which both the Europeans and the Obama administration seem to be undecided on whether this is the time to re-engage with the Israeli-Palestine diplomatic process.
A meeting of the "quartet" is to take place later this month at the United Nations General Assembly in New York to discuss ways of going forward with the process.
The timing of the labelling statements took Israeli officials by surprise, particularly because they had assurances from European governments that no moves would be made on the Palestinian front until the issue of the Iran deal - the battle to have it approved in the US Congress and the implementation procedures - were settled.
"You would have thought that with Europe facing a massive refugee crisis, Mogherini would have more pressing matters to attend to," said one Israeli official.
A senior European diplomat also expressed surprise at the timing and offered the opinion that "Mogherini seems to be feeling a bit left out right now and this is her attempt to get back into the game. I will be surprised if the labelling actually goes ahead, but it gives people something to talk about Europe's role and there has been some work done on this already so there is a framework. It probably won't happen just yet though."
Israel's surprise, however, is misplaced, as the labelling issue has been in the works for over seven years, and some European governments have been urging joint action for a long time. Much of the original impetus came from the British government under Gordon Brown.
Whether or not the latest statements lead anywhere soon, this is certain to remain something European diplomats will push whenever they feel their voices are not being heard on the Israel-Palestine conflict.
