Updated 3.48pm

Products originating in Israeli settlements must be clearly labelled as coming from there, Europe's top court has ruled in a decision that is likely to prove controversial.

The European Court of Justice said that, under EU rules on food labelling, it must be clear where products are from so that consumers can make choices based on "ethical considerations and considerations relating to the observance of international law."

"Foodstuffs originating in the territories occupied by the state of Israel must bear the indication of their territory of origin," the court said. 

The ruling comes after France's top tribunal asked for clarification of rules on labelling goods from the occupied West Bank and Israeli-annexed east Jerusalem, as well as the Golan Heights, which Israel took from Syria in 1967.

The secretary general of the Palestine Liberation Organisation on Tuesday welcomed the ruling.

"We welcome the decision of the European Court of Justice and call upon all European countries to implement what is a legal and political obligation," Saeb Erekat said in a statement.

"Our demand is not only for the correct labelling reflecting the certificate of origin of products coming from illegal colonial settlements, but for the banning of those products from international markets."

Israel said it strongly rejected the ruling and accused the EU's top court of a "double standard".

"The ruling's entire objective is to single out and apply a double standard against Israel," it said in a statement.

"There are over 200 ongoing territorial disputes across the world, yet the (European Court of Justice) has not rendered a single ruling related to the labelling of products originating from these territories."