British sanctions on Israel trade could, however, cause a split inside the Labor Party, where a third of the party has signed a letter to the new PM calling for sharp measures against settlements.

Reported move would be part of British response to E1 settlement expansion plan; some Labour officials warn it would be difficult to enforce; 140 party MPs sign letter of support

The Prime Minister is said to want to strengthen the Government's position in response to Israel pushing ahead with plans for a controversial settlement project.