Baroness Tonge has accused Israel of being responsible for the rise of Islamist terrorism and Daesh.
The life peer told the House of Lords that Israel was provoking a generation of violent extremists who would have “a justified grudge” against Israel and Britain.
Baroness Tonge resigned as a Liberal Democrat peer in 2012 after saying Israel would “not last forever” and would eventually “lose support, and then they will reap what they have sown”.
Speaking in a Lords debate today on the conditions and health of Palestinian children, the Baroness, who is still a Lib Dem member, told the chamber: “My lords, the treatment of the Palestinians by Israel is a major cause of the rise of extreme Islamism and Daesh.”
After detailing alleged killings of Palestinian youths by Israeli soldiers, she said: “I assure you that the great danger for Israel is that by treating children in this way, they are creating a generation of terrorists who will have a justified grudge against Israel and the countries that support her.”
She also rejected claims that the Palestinian Authority had incited its citizens to commit terrorist acts.
“The children of Palestine do not need to be told to react to what is happening around them,” she said.
Lord Hamilton, who served as Armed Forces Minister under Margaret Thatcher and John Major, rejected the comments during the debate.
He spoke about “schools on the West Bank, where the rhetoric is a very nasty form of antisemitism, the kind of thing we associate with Nazi Germany.
“They liken Jews to vermin, as the Nazis used to do in Germany. The result of this radicalisation is that a number of young Palestinians have actually found their way into Israel proper and murdered Israelis.”
The Conservative peer added: “One has to accept that because of the problems of Hamas deciding to readily declare war on Israel, despite being given back the territory of Gaza in which to live, that there is certain reluctance in Israel to go ahead with a two-state solution that may create an enormous security problem for its own citizens.”
Lord Palmer, Middle East adviser to Lib Dem leader Tim Farron and Lib Dem Friends of Israel vice-president, said: “Palestine ranks 113th out of 188 nations with the human development index. This is roughly the same as Egypt and is the average for Arab states.
“Are we going be having a debate on the other 188 nations, some of which I have described?"
The two-hour debate was called by Lord Warner, a former senior policy adviser to Jack Straw.
Marie van der Zyl, Board of Deputies vice-president, said: "Another House of Lords debate and another outrageous speech from Baroness Tonge on the Middle East.
"It is time for Liberal Democrat leader Tim Farron to expel her once and for all from the party."
