Israel fears other European countries could follow Sweden's government in recognising a Palestinian state, a concern reinforced by the Commons vote.

The foreign ministry in Jerusalem did not attach major importance to last week's Commons motion, which does not compel the British government to change its policy.

But there is growing concern that the move could be the start of a wave of political and diplomatic initiatives to pressure Israel into making concessions in the peace process with the Palestinians.

While so far no other government or parliament in Europe has officially announced plans to recognise Palestine, there have been reports that parliamentarians in Spain and Belgium are considering such a move.

France's Foreign Minister Laurent Fabius said last week that "it is logical that France recognise a Palestinian state - the question is, will it be helpful?"

Israeli diplomats, however, dismissed recent reports that the European Union is planning gradual sanctions over Israel's settlement activities, including banning Israeli settlers who have been indicted of crimes from the EU.

"These plans sound half-baked" said one diplomat. "How are they even planning to start implementing them?"

This week, Israeli newspaper Haaretz reported that the EU wanted to notify Jerusalem of certain "red lines" on settlement-building, which the Europeans see as jeopardising the possibility of a future Palestinian state alongside Israel.

Another international forum where Israel sees the Palestinians gaining the upper hand is the United Nations Security Council. New non-permanent members elected to the council - including anti-Israel Venezuela - there could be a majority for the Palestinians in the next vote on statehood.

In addition, a United States' veto is no longer a given, as it has been in the past. The Obama administration is in the last two years of its second term and may be prepared to challenge Israel to make progress in the peace process.