An Israeli cabinet minister has accused the UK government of 'encouraging' Hamas to re-start rocket fire from Gaza, following a decision to suspend some arms exports to Israel if fighting resumes.

On Wednesday night, the Department of Business confirmed it would freeze 12 licenses for arms export contracts of UK companies to Israel if "significant hostilities resume".

Strategic Affairs Minister Yuval Steinitz said the decision was "exceedingly odd" and warned it could be a motivation for Hamas to refuse an extension of the ceasefire, which came into effect on Sunday night.

"I tell you honestly, I heard it, but although I have a PHD in Philosophy, I didn't understand it. What is the message? I want to understand what is the message?", said Mr Steinitz, addressing the Jerusalem Press Club.

"If this is the message it's exceedingly odd, I don't believe that this is the message.

"If Hamas will resume rocket launching at our cities tonight. If Hamas will choose to resume the fighting and the rocket attacks against Israeli civilians then Britain will put some restrictions on defence cooperation with Israel?

"I hope this is not the message because this could be very encouraging for Hamas to resume fire."

The announcement by Business Secretary Vince Cable followed a review of licensed exports to Israel ordered by Foreign Secretary Philip Hammond.

The review found 12 contracts related to components and parts that could be used by the Israeli military as part of its operations in Gaza.

Arms export licences can be suspended by the UK if there is clear risk the exported goods might be used in actions considered to be political repression, or could provoke or prolong a conflict.

"The UK Government has not been able to clarify if the export licence criteria are being met. In light of that uncertainty we have taken the decision to suspend these existing export licences in the event of a resumption of significant hostilities", said Mr Cable.

He added: "In the event of the renewal of significant hostilities, the Government's concern is that it may not have sufficient information to determine whether the licence assessment criteria have been contravened.

"For example, whether a serious violation of international humanitarian law has occurred and whether equipment containing UK components has been used. It therefore would suspend licences while it establishes more information."

The decision follows significant internal divisions inside the coalition Government.

Liberal Democrat leader and Deputy Prime Minister Nick Clegg has been outspoken in his criticisms of the Israeli operation in Gaza, while Prime Minister David Cameron has been keen to reaffirm Israel's right to self-defence.

Last week Baroness Warsi, a Foreign Office minister, resigned from the Government in opposition to Mr Cameron's policy towards Israel's Gaza operation, describing it as "morally indefensible".

Israeli and Palestinian delegations are currently holding indirect negotiations in Cairo, mediated by the Egyptian government, to try and reach an agreement for a long-term end to hostilities.