Extract from ABC News
The former British consulate building which will now operate as a "UK Mission" in East Jerusalem. (ABC News: Hamish Harty)
In short:
The UK government says it will continue delivering "vital services" at UK Mission, Jerusalem as Israel says most diplomats will leave the building.
Israel said in September it would shut the consulate in retaliation for UK sanctions on Israeli settlements in the occupied West Bank.
What's next?
British Foreign Minister Ed Miliband says the building will remain open under its new name.
Britain says its nearly 200-year-old consulate in Jerusalem will remain operating at a smaller scale after Israel ordered it shut in a dispute over sanctions on settlements.
The British Foreign Secretary says the building will operate as a "UK Mission" in the city.
Israel last month issued a 30-day deadline for Britain to close the consulate after London announced sanctions targeting Israeli settlements in the occupied West Bank, a dispute that has strained relations between the longtime allies.
The deadline expired on Thursday, local time.
Gideon Saar, Israel's foreign minister, said in a statement that the consulate in East Jerusalem would formally end operations, but that some British diplomats would be allowed to continue work in the building under a deal struck between Israel and Britain.
Mr Saar's British counterpart, Foreign Secretary Ed Miliband, said his country does not accept that Israel has the legal right to close the consulate.
The consulate is in a part of the city Israel captured in the 1967 war and which Israel later annexed in a move that most countries do not recognise.
A plaque reading British Consulate General and another sign for its consular section were removed from the building on Thursday. (ABC News: Hamish Harty)
Mr Miliband said that following discussions with Israel "our consulate general building will not be closing and will be known as the UK Mission, Jerusalem from today".
He said the UK Mission would continue to "deliver vital services and our work with the Palestinian people".
The United Nations and most countries consider the Israeli settlements to be illegal under international law.
Israel disputes this.
Workers remove signage from consulate building
Plaques reading British Consulate General and another sign for its consular section had been removed from the building.
The British flag was still flying over the building earlier in the day.
Israel has been adamant the consulate will close even as Britain sought to keep it open, including sending the country's top national security adviser to Israel last week for talks.
A flag flies at the UK Mission, Jerusalem, a day after Israeli Foreign Minister Gideon Saar said he would close it. (Reuters: Ammar Awad/File)
Britain's consulate was founded in 1839, long before the state of Israel was established in 1948.
The closure order does not affect Britain's embassy in Tel Aviv which handles diplomatic relations with Israel's government.
The consulate, in the Sheikh Jarrah neighbourhood of East Jerusalem, handles Britain's relations with Palestinians in Jerusalem, as well as in the West Bank and Gaza.
It also provides consular services to Palestinians.
Britain's consulate in Jerusalem was founded in 1839. (ABC News: Hamish Harty)
The British sanctions announcement, and Israel's order to close the consulate, mark a new low in a relationship that has deteriorated over the past three years.
Britain has repeatedly criticised Israel over its actions in the war in Gaza and over Israeli settler attacks on Palestinians in the West Bank.
Prime Minister Benjamin Netanyahu's government, which faces an election later this month, has accused Britain's governing Labour Party of being hostile towards Israel.
Reuters/AFP
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