The British Council has distanced itself from the pro-boycott aims of a Palestinian literature festival due to take place in Gaza from this Saturday.

The Palestine Festival of Literature, known as PalFest, is supported by the British Council. It is also backed by the Arts Council England, which awarded the organisers £10,000 to enable them "to redevelop and redesign their website to encourage international literary exchange".

On their website the PalFest organisers state that they endorse the "2004 Palestinian call for the academic and cultural boycott of Israel".

Actress Emma Thompson, who recently signed a letter calling for Israel's Habima Theatre Company to be banned from attending the Globe Shakespeare festival, is one of the patrons of the event, which began in 2008. Other patrons named by the event's organisers include writers Philip Pullman and Seamus Heaney.

PalFest also has the backing of Gaza's Al-Aqsa University. A professor from the unievsrity, Dr Haidar Eid, told the Guardian that Arab cultural figures were visiting Gaza for the festival "to show solidarity with Palestinian academics and artists in support for their call to increase the global BDS campaign against apartheid Israel".

The British Council's director of literature, Susanna Nicklin, made it clear that their support for the event was not an endorsement for the call for a boycott.

"The British Council is a non-political organisation, and we believe that international cultural exchange makes a powerful contribution to a more peaceful, tolerant and prosperous world. Therefore the British Council does not support cultural or academic boycotts."

Ms Nicklin highlighted the British Council's "long record of work in educational and cultural programmes in both Israel and the Palestinian Territories", including its support for the International Writers Festival in Jerusalem this month.

A spokesman for Arts Council England did not comment on the boycott aim but said it was not the organisation's role "to dictate artistic policy to a funded organisation, or to restrict an artist from expressing their views".

He said: "What our policies and procedures do ensure is that we fund of a wide range of organisations and individuals who, collectively, present a diverse view of world society, and that their work is compliant with legislative requirements."

The Board of Deputies' chief executive Jon Benjamin said: "We are disappointed and surprised that the Arts Council England and British Council, two government funded organisations, are specifically acting in contravention of stated British Government policy by supporting an event which advocates academic and cultural boycotts of Israel.

"In 2009 the British Embassy in Israel stated that, “The British government is opposed to any kind of boycott of Israel." We are therefore at a loss to understand why this pro-boycott event has been chosen to receive money. We call upon the Arts Council and British Council to withdraw funding and direct their efforts towards fostering understanding between Israelis and Palestinians, rather than dividing them."