War on Want has broken ranks from the UK's mainstream NGO community and called for sanctions against Israel.
In a paper called Palestine 2005: Time for Sanctions against Israel, the charity demands the suspension of Israel's duty-free trading preferences with the EU.
It says Palestinians have suffered a massive rise in poverty as a result of the Israeli occupation and construction of the security wall.
Chief executive Louise Richards said: "The UK must now use its unique influence within Europe during 2005 to introduce sanctions against Israel. Anything less will be seen as a betrayal of the Palestinian people."
War on Want says its call is backed by the United Nations Special Rapporteur on the Right to Food, Jean Ziegler, and Labour MP Gerald Kaufman.
But other UK NGOs have not endorsed it. Christian Aid advocacy officer William Bell said: "No other NGO I know of is calling for sanctions. We don't think it's appropriate at the moment. Sanctions are problematic."
Save the Children regional director for the Middle East Pram Unia said: "From a children's rights perspective, we don't want to single out one side. The Palestinian authority has had some failings too."