Opposition leader Ed Miliband told a packed Labour for Friends of Israel reception at his party's conference in Liverpool on Tuesday that backing the Palestinian bid for statehood was the right thing to do.

In a speech that was warmly received he said he understood that for some in the room this was a difficult decision to accept. But as negotiations had not moved on he believed it was "right to support the Palestinian wish for the upgrading of their status at the UN".

However, the loudest applause came when he said: "In the end the only way forward is a negotiated solution".

Mr Miliband emphasised that support for Israel within the party remained strong and pointed to the example of Labour's support for the change to the law on universal jurisdiction: "We were right to take the decision to support the principle of what the government is doing," he said.

He was joined on the platform by Foreign Secretary Douglas Alexander, whike several other shadow cabinet members including Jim Murphy, Ivan Lewis and Ed Balls also attended the event, as did rising Labour stars Chuka Ummuna and Luciana Berger

Daniel Taub , the new Israeli ambassador to the UK, was courteous but direct in his response. He asked where the genuine friends of the Palestinians were to advise them to take a different course. He said support for the Palestinian bid for statehood was a distraction from the path to genuine negotiations. "It is sending a message to the Palestinians that you don't have to make tough choices for peace," he said.

Mr Taub also condemned the TUC for its decision to review its relationship with the Histadrut : "It is a tragedy when progressive bodies play a non-progressive role." He noted that 430,000 people had taken to the streets of Israel to campaign for social justice and called on people on the liberal left to recognise the significance of this movement.

He said added that the Arab Spring showed people across the Middle East wanted the same freedoms enjoyed in democracies such as Israel.

But he also sounded a warning about the anti-Israeli nature of some of the demonstrations: "How quickly new freedoms turn into old hatreds," he said.

The reception was the first since the organisation became a membership organisation under the leadership of new director Jennifer Gerber. LFI chair John Woodcock MP paid tribute his predecessor David Cairns, who tragically died earlier this year.

Ms Gerber praised Mr Miliband's "very warm words of support for LFI, for Israel, for peace and for a negotiated two state solution". She said of the reception: "The turnout was fantastic and demonstrated the support LFI has across all levels and parts of the the Labour Party."