Prime Minister Andy Burnham is reportedly preparing to announce significant sanctions against Israeli settlements in the West Bank in the coming weeks. This move is seen as an effort to mitigate a potential revolt within the Labour Party over the issue of Israeli settlement expansion.

The government's stronger stance comes in response to Israel's advancement of plans for a controversial settlement project. Foreign Secretary Ed Miliband had previously stated the government would outline 'comprehensive' measures concerning the E1 scheme, a long-planned development that risks isolating the West Bank from East Jerusalem and potentially jeopardizing a two-state solution.

More than 140 Labour Members of Parliament, representing nearly a third of the parliamentary party, have signed a letter urging the government to ban trade with what they deem illegal Israeli settlements. Further pressure is expected at the Labour Party conference in Liverpool, where members intend to table a motion demanding sanctions against Israel.

Burnham aims to make an announcement before the conference to prevent the settlement issue from overshadowing his first party conference as leader. However, warnings have been issued that a trade ban on settlements could inadvertently lead to a de facto boycott of all Israeli goods. A senior government source indicated that plans for a trade ban on settlements and the sanctioning of individuals are expected to be approved.

Sources suggest Burnham wishes to adopt a more 'robust' position than his predecessor, Keir Starmer. Settlement development in the E1 area, east of Jerusalem, has been under consideration for over two decades, despite international consensus viewing such construction in the West Bank as illegal and an impediment to peace.

Practical challenges in implementing a trade ban have been highlighted, particularly the difficulty in distinguishing goods originating from settlements versus those from Israel. There is a concern that legitimate Israeli and even Palestinian businesses in occupied territories could be negatively impacted by broad sanctions.

Labour Friends of Israel, a group including senior Labour MPs and peers, has voiced strong opposition to Israeli settlements and supports targeted measures against extremist settlers. However, they argue that a blanket trade boycott is practically unworkable, risks becoming a de facto boycott of all of Israel, and could be damaging to UK interests, the British Jewish community, and Palestinian workers. They also caution that such actions, especially with a general election approaching on October 27, could politically benefit the Israeli right.

Senior Labour MP Emily Thornberry emphasized the urgency of taking action, stating that the E1 development represents a critical juncture that would effectively divide Palestine and cut it off from Jerusalem. She expressed concern that Israel is attempting to finalize contracts before potential electoral shifts.

A government spokesperson declined to comment on speculation but reiterated the Foreign Secretary's position that illegal settlements undermine the viability of a Palestinian state and regional security.

Burnham previously acknowledged that Labour's initial response to actions in Gaza was insufficient, vowing to strengthen the party's approach and suggesting the UK was too slow to call for a ceasefire. He has advocated for measures to ban trade with illegal settlements but has not accused Israel of genocide, a stance taken by some Labour MPs.