Israel says British Consulate in east Jerusalem has ceased to function and 20 diplomats will leave

Britain says it has reached an agreement with Israel over its consulate in east Jerusalem, even as Israel said the building had “ceased to function” as a consulate and 20 diplomats would leave the country. The sign outside it was removed.

Here is the latest news from the Middle East on Thursday. Read our full coverage here .

The sign outside the consulate in East Jerusalem was taken down, but Britain said it had reached an agreement with Israel's government and a small team of diplomats would continue to operate there.

It was the latest development in a diplomatic standoff after Israel's government said it would close the consulate in response to the United Kingdom banning trade with Israeli settlements in the occupied West Bank.

Israeli Foreign Minister Gideon Saar said in a statement that the consulate had “ceased to function as a consulate today.” He said the U.K. would continue to operate with a “task force” of seven diplomats in the building and that “their scope of activity will be very limited.”

He added that “Israel will no longer turn its cheek to diplomatic attacks against it."

British Foreign Secretary Ed Miliband said in a statement that the building “will not be closing, and will be known as the UK Mission, Jerusalem” after discussions with Israel's government. Saar said 20 British diplomats will leave Israel as a result of the dispute. Miliband said those remaining would continue to deliver "vital services” and work with Palestinians, with no details.

“This will ensure that we maintain our longstanding British presence and the U.K.’s role in support of a two-state solution,” he added. The U.K. said based on the current agreement, it would not take reciprocal action such as expelling Israeli diplomats from London.

This report will be updated throughout the day as new developments emerge.