Britain is "colluding" with Israel in oppressing the Palestinians by giving it privileged trade access, former British international development secretary Clare Short said today.
Ms Short said Israel was creating an "apartheid" system that left Palestinians impoverished, and she urged ministers to use trade access as leverage.
Foreign Office Minister Kim Howells rejected the charge of collusion, however.
Ms Short, who resigned the Labour Party whip over Iraq, told Westminster Hall: "The situation in the Palestinian territories is desperately distressing and depressing."
Clare Short, Britain's former International Development Secretary
Israel was guilty of "bloody, brutal and systematic annexation of land, destruction of homes and the deliberate creation of an apartheid system," she said. "The EU and Britain are colluding in this operation and the building of a new apartheid regime."
She said trade treaties with Israel included human rights clauses and complained: "Why are these not being enforced?
"No action is taken to force Israel to adhere to international law. It is impossible now to believe that there could be such a peace, she said.
"Instead I feel we face the possibility of years if not decades of bloodshed, unless we change our policy."
Mr Howells agreed Britain had to "keep on pressing" the Israelis over settlements but disagreed with Ms Short on using trade deals as leverage.
PA