UK food labels are set to distinguish between goods from Palestinians in the occupied territories and produce from Israeli settlements.
Food packaging guidelines advise a change from labels usually naming only Israel or West Bank as the source.
The government said it was opposed to a boycott of Israeli goods, but that the settlements posed an obstacle to peace.
The Palestinian general delegation to the UK welcomed the move, but Israel said it was “extremely disappointed”.
All Jewish settlements in the West Bank are illegal under international law, though Israel disputes this.
The new guidelines recommend that food labels in supermarkets should bear the phrases “Israeli settlement produce” or “Palestinian produce”.
