A British government plan to label vegetables produced by Jewish settlements in the occupied West Bank has sparked international tension as foreign secretary David Miliband visits Israel.

According to The Telegraph, the UK government is planning to crack down on arrivals of products from Jewish settlements in the occupied West Bank under the EU-Israeli trade agreement - which does not cover settlement products.

The government is unhappy that there is no clear labelling informing shoppers if a product was not made in Israel but in a settlement. The Palestinian West Bank is home to 480,000 Jewish settlers, whose settlements are illegal under international law.

The UK has called on other EU governments to follow its lead and look at reinforcing labelling rules.

A spokesman for Miliband said there had been a “clear exchange of views” during a meeting between the foreign secretary and Israeli prime minister Ehud Olmert.

The spokesman for Israel’s foreign minister Tzipi Livni said the government was “aware of the British concerns” and was in talks on “ways to solve this matter”.

Many settlements thrive on fruit and vegetables for export. But consumer groups fear that shoppers could mistakenly buy goods in the belief that they are helping impoverished Palestinian farmers, unless labeling becomes clearer.

Marks & Spencer and Asda have already pulled products from the West Bank but there are concerns that some supermarkets, such as Waitrose, have labelled items as produce of “the West Bank”, but failed to note the exact source.

Miliband’s spokesman said: “The secretary made clear the government was not trying to move the goalposts but properly following up on representations made to it about the system.”