The British ambassador to Israel has said international support for the Jewish state among those in the political mainstream is eroding, driven by settlement expansion in the West Bank and continued restrictions on Gaza.

There is "growing concern" in the UK over lack of progress towards peace with the Palestinians, and Israel was now being seen as Goliath against the Palestinians as David, said Matthew Gould, in reference to the biblical story.

In an unusually forthright interview for Israel's Channel 10 news, Gould said he detected a shift among the middle ground of British members of parliament towards a more critical view of Israel.

"Israelis might wake up in 10 years' time and find out that the level of understanding in the international community has suddenly changed, and that patience for continuing the status quo has reduced," he said.

"Support for Israel is starting to erode and that's not about these people on the fringe who are shouting loudly and calling for boycotts and all the rest of it. The interesting category are those members of parliament in the middle, and in that group I see a shift."

But, he added, Britain was "by no means unique" in its growing concern about the lack of progress towards peace. "Anyone who cares about Israel's standing in the world should be concerned about the erosion of popular support."

The shift was a result of Israeli government policies, Gould said, suggesting that it could not be countered or obscured by hasbara. The Hebrew word for explanation refers to efforts by the Israeli government and its supporters to promote a pro-Israel agenda and challenge what it sees as negative media coverage.

"The centre ground, the majority, the British public may not be expert, but they are not stupid and they see a stream of announcements about new building in settlements, they read stories about what's going on in the West Bank, they read about restrictions in Gaza. The substance of what's going wrong is really what's driving this," Gould said.

He added: "Israel is now seen as the Goliath and it's the Palestinians who are seen as the David." In the biblical story of David and Goliath, the young future king of Israel defeats the mighty Philistine warrior armed only with a sling and stones.

Yigal Palmor, spokesman for the Israeli foreign ministry, said: "The feelings of friendship among Israelis towards the British and Britain in general are as strong as they have always been. It makes us sad to hear the ambassador talking about a growing asymmetry. But diplomats don't just make comments, they convey messages. We have taken good note."

Dermot Kehoe, the chief executive of Bicom, an organisation that promotes Israel in the UK, said: "The Britain/Israel relationship has never been stronger in terms of trade, technology and security cooperation. Our polling shows the relationship is not eroding.

"The ambassador is right to highlight the importance of the peace process to the British public. However, Israel is not Goliath. It is a small country surrounded by threats from Iran to Hezbollah to Hamas. The Palestinians also share responsibilities to return to the negotiating table in the search for a lasting peace."

An Israeli official dismissed the David and Goliath allusion, saying it "does not describe anything near reality. It's a dishonest attempt to take a biblical myth and turn it upside down to make Israel look bad in Jewish terminology." In the past 30 years, he added, there had been other attempts, particularly by the Palestinians, "to dispossess Jews of our history".

The British embassy in Tel Aviv declined to comment on the interview.

At 40, Gould is the first Jewish person to serve as British ambassador to Israel. He said in an interview to mark his arrival in Israel in 2010 that being Jewish gave him "a visceral understanding of why Israel is so fixated on its own security and why security and peace mean so much to Israel and why it's a country which feels so keenly that it lives on the knife edge". He previously held posts in Tehran, Washington and Downing Street.

A second high-profile British diplomat last month said that the prospects for peace between Israel and the Palestinians were diminishing. In an article for Prospect, Tom Phillips, who was Gould's predecessor as ambassador to Israel, said both sides and the international community were responsible for "the chances of a solution to the long-running conflict [growing] bleaker".

Phillips, who recently retired after a stint as ambassador to Saudi Arabia, wrote: "This is the most complex conflict I know. And it may already be too late to achieve a two-state solution, even if that would have been the right solution, and the only possible solution."