The government has defeated a legal challenge from the Palestine Solidarity Campaign after a court upheld its government’s right to restrict councils that boycott Israel.

The PSC claimed it was a "triumph" when a judicial review found the government was wrong to issue regulations that local councils could not boycott foreign countries when investing their pension funds a year ago.

But on Wednesday, three Court of Appeal judges unanimously upheld an appeal from the Department for Housing, Communities and Local Government.

The government told local authorities it was inappropriate to use pension policies to pursue boycotts, divestment and sanctions against foreign nations and UK defence industries, unless those countries were subject of a government embargo.

Appeal Court judge Sir Stephen Richards said he was satisfied that the government’s action  “fell within the powers conferred by the legislation”.

Speaking on behalf of anti-boycott campaigners Jewish Human Rights Watch, Robert Festenstein said it was “a relief that the government’s appeal has been successful". 

“For too long the PSC has been fermenting antagonism through local authorities towards the Jews by claiming to be supporting the Palestinian people but in reality simply denying the Jews the right to nationhood,” he said. 

Mr Festenstein added it was “of profound concern" that Labour leader Jeremy Corbyn remains a patron of PSC.

"It is little wonder that Jews in this country are worrying about their future,” he added.

The Appeal Court is due later this month to hear an appeal brought by JRHW over boycott resolutions against Israel in local councils.

“We all hope that the court will take a similar robust decision as they have done today,” Mr Festenstein said.

Hugh Lanning, chair of the PSC, said he was "incredibly disappointed". 

He said: "This decision will allow the government to pursue its own agenda at the expense of democracy and the ability to exercise freedom of conscience.

"PSC will be considering the possibility of an appeal. The principle upheld last year by the High Court that the government should not have the power to prevent people from making ethical decisions with regard to the investment of their money remains valid.”