Airbnb has said it will remove from its website all properties in Israeli settlements built on the occupied Palestinian territories in the West Bank, after years of accusations that the company was benefitting from rentals in the illegal outposts.

The accommodation bookings website announced on Monday that around 200 listings would be taken down in what will be seen as a victory for the Palestinian-led anti-occupation movement.

“Many in the global community have stated that companies should not do business here because they believe companies should not profit on lands where people have been displaced,” it said in a statement posted on its website.

“We concluded that we should remove listings in Israeli settlements in the occupied West Bank that are at the core of the dispute between Israelis and Palestinians.”

The announcement came before the publication on Tuesday of a damning report by the New York-based advocacy group Human Rights Watch on the negative implications of its settlement business.

Airbnb, which says it operates in 191 countries, will face a backlash from within Israel and from its international backers, who have fiercely fought attempts to delegitimise Israel’s control of the West Bank.

Israel’s tourism minister Yariv Levin called the decision “discriminatory”, according to Israeli media, and instructed his ministry to “limit the company’s activity throughout the country”. It was not clear what this would mean.

Israel captured the West Bank from Jordanian forces in 1967 and continues to control and occupy the area, although Palestinians have limited self-rule over small enclaves.

Ideologically driven Jewish nationalists who claim all of historic Palestine have since created outposts there, pushing out Palestinian residents. Today, more than half a million settlers live in what have become sprawling towns connected by a network of roads that cut up the West Bank.

Settlements have long been seen as a critical barrier to a peace deal, which the international community broadly agrees should be two states side by side, one for Israelis and one for Palestinians.

Activists have for years called for Airbnb and other companies to withdraw from the disputed territory, and Airbnb acknowledged it had “struggled to come up with the right approach”.

Human Rights Watch welcomed the move. Arvind Ganesan, the business and human rights director at the organisation, said Airbnb’s decision was “an important recognition that such listings can’t square with its human rights responsibilities”.

“For two years, Human Rights Watch has spoken with Airbnb about their brokering of rentals in West Bank settlements that are illegal under international humanitarian law and for which Palestinian ID holders are effectively barred from entering,” he said.

The settlement movement has sought to encourage tourism in occupied land, with the help of the Israeli government, which established national parks there. A leaked European Union report said some projects were being used “as a political tool to … support, legitimise and expand settlements”.

In 2016, Airbnb came under added scrutiny after it was revealed that its website listed settlement properties as being inside the state of Israel, and not the Palestinian territories.

Husam Zomlot, a Palestinian diplomat, condemned the firm at the time, saying it was “promoting stolen property and land. There will come a time when companies like this, who profit from the occupation, will be taken to court.”

On Monday, a senior Palestinian negotiator, Saeb Erekat, described Airbnb’s decision as an “initial positive step” but complained that it did not include East Jerusalem, which was also captured and occupied in the 1967 war.