The government faces being dragged into the high court over the sale of military hardware to Israel in an unprecedented legal move that puts the UK's controversial export policy on a potential collision course with the EU.

Law firm Leigh Day, representing the Campaign Against Arms Trade (CAAT), has written to the business secretary, Vince Cable, claiming that the failure by the British government to suspend existing licences for the export of military components to Israel is unlawful as there is a risk that they may have been used in Gaza. It says that it has been instructed to seek a judicial review of the government's reluctance to suspend licences unless it agrees to stop the export of the components.

The move puts the UK's multimillion-pound military export programme in the spotlight when Israel's actions in Gaza have caused international concern and there is mounting disquiet about the role foreign states are playing in facilitating the conflict, which is now the subject of an uneasy ceasefire.

The government has come under sustained pressure to justify its continued sale of military equipment since Israel launched Operation Protective Edge on 8 July. To date, more than 1,900 Palestinians, most of them civilians, have been killed, according to Palestinian and UN officials. On the Israeli side, 67 have died, all but three of them soldiers.

Following a review initiated by the prime minister this month, the Department for Business, Innovation and Skills announced it would suspend 12 export licences for arms and other military equipment to Israel only if the current ceasefire was broken.

However, in its letter to Cable, shared with the Observer, Leigh Day says the definition of what constitutes a "broken" ceasefire leading to a resumption of hostilities is not defined or explained. It says the campaign group is concerned that arms manufactured in Britain may have been – and could continue to be – used in Gaza in breach of international humanitarian and human rights law.

The law firm cites the air strike on a UN school in Rafah as an example of such a breach. The attack, reportedly by Israeli troops, resulted in the deaths of 10 civilians and was described by the UN as a "gross violation of international humanitarian law" and a "moral outrage and a criminal act".

"If arms from the UK are being used to commit crimes against humanitarian law, and human rights law, then export licences for these materials must be revoked immediately," said Rosa Curling of the human rights team at Leigh Day, who is representing the campaign group.

"If this is not done, the government's current policy is unlawful and susceptible to legal challenge. We have asked the government to clarify the review of the arms export licences and requested details of all current licences to understand what is being sent so we can get a better picture of whether any of the arms supplied by the UK have been or may be used in criminal acts."

Export licence applications to Israel are considered case by case and checked against EU criteria which stipulate that the government must consider their impact on regional peace, security and stability, as well as the human rights record of the recipient. Campaigners believe the UK's decision to continue to allow exports of military equipment to Israel runs counter to these criteria.

"After the slaughter of recent weeks, it beggars belief that the UK government is continuing to allow the export of components which it admits could be part of equipment used by the Israeli Defence Forces in Gaza," said Ann Feltham, parliamentary co-ordinator at the CAAT. "Such equipment containing UK components has been used in Israeli attacks in the past and the licences should never have been granted in the first place."

Any suspension of exports would have an impact on UK military hardware manufacturers. The CAAT claims that since 2010 the UK has licensed £42m of military equipment to Israel, including that used in targeting systems and drone components. UK companies also provide components that go into US-built equipment destined for Israel.

The legal challenge launched by Leigh Day, the firm that secured £20m in compensation from the government on behalf of victims of torture during Kenya's Mau Mau uprising in the 1950s, is highly unusual but not without precedent. In 2004 the high court refused permission for a judicial review into the government's continued sale of military equipment – including Scorpion tanks, Saracen armoured personnel carriers and Hawk aircraft – to Indonesia.