The Israeli government is concerned that Britain is planning to support a move to have West Bank settlement products labelled in the European Union.

The EU-Israel trade agreement, signed in 2005, exempts Israeli goods from certain tariffs but not those that come from beyond the Green Line.

Israel’s refusal to label or mark such products has long been a bone of contention and the Danish government is planning to urge EU members at a special meeting in Brussels later this month to adopt regulations that would force Israel to do so.

Israel’s position is that special labelling would be discriminatory and a form of boycott against Israel.

The Danish government has already announced that it plans to label goods from the settlements sold in Denmark, and is now trying to introduce similar policies on an EU-wide basis.

According to a report this week in Haaretz, the Foreign Ministry in Jerusalem is concerned that Britain is one of the countries that could back such an initiative. However, British government sources say it has yet to formulate a position, given that the Danes have yet to clarify exactly what their proposal is.

Four years ago, then Prime Minister Gordon Brown led European initiatives to label produce made in the settlements, proposing guidelines for differentiating Palestinian West Bank products from those made in Jewish settlements. The Israeli government under Prime Minister Ehud Olmert opposed these moves and refused to label settlement products accordingly.

Recently, a senior Israeli diplomat declared that “while the British are against settlement activity, we don’t see the Cameron government initiating a new move against settlement products. However, we can’t be certain that they won’t support such an initiative if another government brings it up.”

British government sources confirmed this week that the UK did not want to be seen co-operating in any way with a boycott of Israel and that the 2009 British proposal was for “voluntary” labelling.

A Foreign Office press officer said that the government was not about to comment on a Danish proposal before it had been properly presented to the relevant EU forums.