The reconciliation deal between Fatah and Hamas will not lead to Hamas being removed from the British government’s list of proscribed terrorist groups, the House of Lords has been told.

During a debate in Parliament yesterday, crossbench peer Lord Hylton suggested “delisting” Hamas could “help all sides to be rather less intransigent” and help the Palestinians build confidence.

He said the situation in the Palestinian territories had “changed profoundly” since the proscription was imposed, but Baroness Williams, the Home Office Minister in the Lords, said the situation in the Middle East was “so complex” it was “difficult to predict the impact that a particular course of action may have”.

A series of Conservative and Labour peers also responded to Lord Hylton by arguing that Hamas was still a terror group committed to the destruction of Israel.

Labour’s Lord Anderson said: “The reconciliation agreement between the two Palestinian factions is surely to be welcomed and potentially gives Israel a negotiating partner. However, will the minister confirm that Hamas still calls for the destruction of Israel, that its military wing still builds tunnels to attack Israel, and that it sends rockets into southern Israel.”

Baroness Williams said she “acknowledged” his comments, but added the government would not “provide a running commentary on any proscribed organisation”. She responded to a question from Tory Lord Kirkhope by saying Britain expected Hamas to acknowledge “the basic right of the state of Israel to exist”.

Lord Judd, the former Labour Foreign Office Minister, claimed that while the actions of Hamas’s “military wing” were “wrong, totally unacceptable and cannot be condoned”, it was, he said, a “pluralist organisation”. He advised the government to pursue a similar path to that taken with the IRA.

Lord Polak, Conservative Friends of Israel honorary president, said it “beggars belief” that peers were debating removing Hamas from the terror list when it “has not renounced terror and it still calls for killing Jews and the destruction of Israel”.

He welcomed the Palestinian reconciliation deal but called for Hamas to be disarmed.

Baroness Williams said the government had been clear.

“The group must renounce violence, recognise Israel and accept previously signed agreements. We now expect to see credible movement towards these conditions, which remain the benchmark against which its intentions should be judged,” she said.

The Home Secretary holds the power to delist a group and end its proscription. Being placed on the list makes a group illegal in Britain and bans it from promoting policies.