British director Ken Loach has withdrawn his film from the Melbourne International Film Festival because the event receives funding from the Israeli government.

Mr Loach followed through on a threat to pull his film, Looking For Eric, from the festival as a protest against “illegal occupation of Palestinian land, destruction of homes and livelihoods [and] the massacres in Gaza”.

He succeeded with the same ultimatum to the Edinburgh Film Festival in May, prompting it to return a grant that was intended to help fund the visit of an Israeli filmmaker.

But MIFF chief executive Richard Moore was unequivocal in his response to Mr Loach, whose film was sold out for its July 30 screening at the festival.

“It is like submitting to blackmail,” he said. “MIFF understands that this issue is a particularly emotional one for people but we will not participate in a boycott against Israel, just as we would not contemplate boycotting films from China or other nations involved in difficult long standing historical disputes.”

The Israeli embassy in Canberra is helping sponsor the visit of Tatia Rosenthal, the director of $9.99, a stop-motion animation based on the short stories of award-winning Israeli author Etgar Keret. The embassy has been sponsoring the festival for years.

Federal MP Michael Danby blasted Mr Loach’s tactics. “Melbourne is a very different place to Londonistan. Mr Loach should stay home in his grim, cold London garret. He and his prejudices are irrelevant to this part of the world.”