Foreign Secretary Philip Hammond has finallly said what no government minister has dared say before – that Israel’s settlement-building programme is not only undermining the peace process but “is intended to undermine the prospects of the peace process”.

This strips away the pretence that the Government believes Israeli prenier Benyamin Netanyahu is sincere when he says he supports the two-state solution and wants peace.

If building settlements is intended to undermine the peace process – and Netanyahu has approved three new settlement expansions in East Jerusalem since the end of the 50-day War in August – then it is clear that Netanyahu does not prioritise peace.

In an unexpected intervention during Foreign Office questions Mr Hammond said new settlement building “will not be allowed to define” the final border between Israel and Palestine and pointed out that buildings “can .. be demolished” if they are on the wrong side of the line.

He adopted a stronger tone than his junior minister Tobias Ellwood who earlier tried to downplay the issue, saying merely that the Government “discourages” further settlement building because it “makes it more difficult for Israel’s friends to defend it” and added that “we do not want people to be distracted by the settlements.”

Labour MP Huw Irranca-Davies asked the junior minister to reconsider his comment that settlement-building was “a distraction” and Liberal Democrat MP David Ward asked him how many illegal settlements would have to be built before the Government took action.

At that point the Foreign Secretary intervened to say that he knew exactly what his junior minister had been trying to say earlier on. “The settlements are illegal and building them is intended to undermine the prospects of the peace process. We must not allow that to happen.

“These are buildings; buildings can be transferred and demolished. Where these buildings are built must not be allowed to define where the final settlement line can go. We must be very clear about that.”

Even after this intervention Mr Ellwood insisted that: “We do not want the settlement issue to hog the wicket here. We need to focus on the humanitarian efforts. We do not want to be distracted by the settlement issue.”

He preferred to dwell on the reconstruction conference in Cairo, which he had attended, and the £20 million the UK had pledged to help kick-start Gaza’s recovery after the 50-day War.

But Mr Hammond’s plain speaking puts the settlement issue back at the heart of the dispute between the UK and Israel – and also questions the integrity of the Israeli prime minister.

This parallels the line taken by the US State Department who recently refused to meet the notoriously hawkish Israeli defence minister while he was in Washington and have repeatedly condemned the latest settlement-building announcements. State department spokeswoman Jen Psaki has not ruled out countermeasures.

The Government issued revised guidance last December that they would “no longer encourage or support” UK businesses trading with illegal Israeli settlements, but the Foreign Secretary’s comments suggest that tougher measures may finally be on the way.

They are unlikely to go far enough for former Conservative aid minister Sir Alan Duncan who suggested last week that British politicians should treat any Israeli MP who supports settlements – which is practically all of them – as an extremist.

“Anyone who supports illegal Israeli settlements on Palestinian land is an extremist who puts themself outside the boundaries of democratic standards.  They are not fit to stand for election or sit in a democratic parliament and they should be condemned outright by the international community and treated accordingly.”