ISRAELI politicians exploded with anger yesterday after the European Commission ruled that goods produced in illegal settlements must be labelled to show their true origin.

Israel is continuing to expand Jewish-only settlements on occupied Palestinian land, with around 550,000 Israelis now living in the West Bank.

The colonisation process has fragmented Palestinian territory and deprived local residents of the best agricultural land and most of their water resources.

New EU guidelines say that goods exported from colonised territory in the West Bank or the Golan Heights, which Israel annexed from Syria, will have to bear the label “Made in the West Bank” or “Made in the Golan” followed by the words “Israeli settlement.”

Israeli cabinet minister Yuval Steinitz immediately claimed that the ruling was “disguised anti-semitism.” Former foreign minister Avigdor Lieberman has also condemned the accurate labelling policy, saying European countries “might as well” label settlement goods with a yellow star reminiscent of those nazi Germany forced Jews to wear.

And Justice Minister Ayelet Shaked said it proved that “European hypocrisy and hatred of Israel has crossed every line.”

But an EU official said accusations of anti-semitism were “without any relevance” and that the decision merely affirmed the long-standing international position that “the occupied territories are not part of the state of Israel.”

The measure will have no effect in Britain, Belgium or Denmark, where similar labelling rules are already in place.

And it does not affect the preferential tariffs that the EU applies to goods from the zionist state itself, as opposed to its Palestinian colonies.

“The EU does not support in any form a boycott or sanctions against Israel,” the bloc’s vice-president Valdis Dombrovskis said.

The EU remains Israel’s largest trading partner and the settlement labelling policy is estimated to cut trade by just £33 million a year out of a total £20 billion — just 0.15 per cent.