Britain's consulate general building in East Jerusalem will remain open as a UK mission rather than close entirely, the Foreign Secretary Ed Miliband announced. The decision marks a retreat from full diplomatic confrontation between the UK and Israel.

The rebrand requires most British diplomats to leave Israel. Only seven diplomats will remain in the East Jerusalem building. Helen Winterton, the consul general, will depart.

Israel's government imposed this change as retaliation for Miliband's decision last month to ban trade with illegal settlements and introduce stronger sanctions against those who fund settlement building. The UK justifies its stance by saying it seeks to protect the two-state solution as the best path to resolve the Israel-Palestine conflict.

The compromise outcome reflects both governments stepping back from escalation. Israel moves against the UK's diplomatic presence by drastically reducing staff numbers and the building's status. The UK retains a foothold in East Jerusalem, though its capacity to operate there shrinks considerably.