Prime Minister Benjamin Netanyahu, 'ordered suspension of diplomatic contacts with the institutions of the European Union and its representatives on this issue,' the foreign ministry said in a Hebrew-language statement.

It said the ban would be in force for the duration of a reassessment of the bloc's role in peace efforts.

But it went on to say that Israel would continue business as usual with national officials of European member states.

Netanyahu flies to Paris tomorrow, where he will meet French President Francois Hollande, among other leaders, on the fringes of the UN climate conference.

Palestine Liberation Organisation official Saeb Erekat said the latest Israeli move was an attempt to coerce the EU into a U-turn on the labelling issue.

The same day, Israel said it was suspending various scheduled EU meetings in response to the labelling move, which it harshly condemned.

US-backed peace talks between the Palestinians and Israel collapsed in April 2014 after nine months of fruitless meetings amid bitter recriminations and mutual blame.

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