British Foreign Minister Ed Miliband stressed that the consulate would not be closing and that it would instead become the UK Mission, Jerusalem, from Thursday.
The British Consulate in East Jerusalem is "ceasing operations" on Thursday, Israeli Foreign Minister Gideon Sa'ar has said, as Israel hits back at UK sanctions on Israeli settlements in the occupied West Bank.
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In a post on social media, Sa'ar said 20 diplomats were "ending their assignments" and would leave Israel, while a small "task force of no more than seven diplomats with a very limited scope of activity" would be authorised to continue working from the building.
"We did not want it to come to this, but the Labour Government’s actions have led us here," Sa'ar wrote.
In response, Sa'ar's British counterpart, Ed Miliband, stressed that the consulate would not be closing and that it would instead become the UK Mission, Jerusalem, from Thursday.
"We have been clear that we do not accept that the Government of Israel has the legal right to close the British Consulate General in Jerusalem, which has been there for nearly 200 years," Miliband said in a statement.
Explaining the change to the UK Mission, he said: "The UK Mission, Jerusalem is independent, operational, and will continue to deliver vital services and our work with the Palestinian people."
Miliband added that some staff and their families had been "temporarily withdrawn" as a safety and security precaution.
Israel said in September that it would shutter the consulate in response to British sanctions on illegal West Bank settlements.
Speaking to parliament early last month, Miliband announced that the UK would be bringing in an "import ban on goods from illegal settlements in the occupied territories" as he accused "settler terrorists" of "ethnic cleansing" in parts of the West Bank.
Sa'ar pushed back at Miliband's comments, branding the accusations as "outrageous lies."
British Prime Minister Andy Burnham called the measures "carefully judged, targeted steps that are not aimed at the Israeli people, but at the unacceptable policies of the current Israeli government."