Prime Minister Gordon Brown criticised Israel’s policy on the territories at a London conference on investment in the Palestinian economy this week.

Speaking at Monday’s opening of the London Business Forum on Trade and Investment with Palestine, he said that “the British government has called on Israel to fulfil its obligations under the fourth Geneva Convention and to permit the sustained delivery of humanitarian assistance to Gaza”. He added that “restrictions on movement and access in the West Bank, despite some small positive steps from the Israelis, mean that overall the Palestinians are not free to move or build in well over half their territory”.

However, Mr Brown also said he was confident of being able to work with whatever government is elected next year in Israel and expressed strong support for the Arab peace initiative.

He said: “On my visit to Israel this summer I met Tzipi Livni, Benjamin Netanyahu and Ehud Barak. They recognise too the urgency of progress and I will continue to talk to them about the need for a two-state solution and the importance of delivering it soon.” Mr Brown said he saw the Arab initiative as the best way forward and termed it “one of the most significant and transformational advances in the peace process”.

He opened the forum together with Palestinian Prime Minister Salam Fayyad, following an earlier meeting between the two at Downing Street.

Mr Fayyad also said that over the last year there had been “more restrictions and checkpoints”, but also mentioned an improvement in recent months in coordination with the Israeli security system. He hailed Mr Brown’s recent initiative to pressure Israel on labelling goods made in Jewish settlements on the West Bank, saying “buying things from the settlements is bad business and Mr Brown understands this”.