A letter signed by 16 European Union foreign ministers calling for the labelling of products from Israeli settlements in the West Bank has caused anger in Jerusalem but is unlikely to be implemented in the near future.

Stricter labelling of Israeli goods that are exported to Europe from outside the Green Line has been proposed a number of times in the past, including seven years ago by former UK prime minister, Gordon Brown.

For various reasons, the plan has never progressed beyond the proposal stage. The latest attempt to revive it came with a letter, drafted by Belgium's foreign minister Didier Reynders and signed by the EU's foreign policy chief Federica Mogherini along with a number of foreign ministers including Britain's Philip Hammond. It is another sign of the frustration of EU leaders over the lack of progress in the peace process and the continued building in the West Bank settlements.

The letter was leaked to Haaretz, which published it last week. It asserts that the measure could help "the preservation of the two-state solution" and that "Green Line Israel and Palestinian producers will benefit from this".

Foreign Minister Avigdor Lieberman responded angrily to the letter. In a radio interview, he said: "Maybe the Europeans will label the products with a yellow patch", referring to the Nazi measures taken against Jews during the Holocaust.

Israeli diplomats said that, despite EU impatience at the impasse between Israel and the Palestinians, it was unlikely that concrete steps would be taken in the near future.

It is felt that no action will come before the formation of a new Israeli government is completed and there is a clearer idea of the policy it intends to pursue regarding the settlements and diplomatic process with the Palestinians.

Dani Dayan, the former chairman of the Yesha settlers' council, said: "Twelve other EU foreign ministers haven't signed. Since the union tends to work on consensus, I'm not worried that, for now, anything will change."