The Union of Jewish Students 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 colleges 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 in which the union will tackle practices it disagrees with - while stopping short of a full boycott. The union's online explanation highlights Palestinian activists' appeals to student unions and likens them to "the South African anti-apartheid movement".
It is NUS's latest anti-Israel move. Its national executive council passed a motion in December demanding that King's College London ceased participation in a research project with Israeli cosmetics company Ahava.
NUS president Liam Burns intervened personally, writing to King's to urge "urgent reconsideration" of the college's involvement in an EU research project that includes Ahava.
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".