The Archbishop of Wales has urged church members to speak out on the 'injustice' of Gaza.
In an address to a formal meeting of the Church in Wales, he compared the current stalemate between Israel and Palestine to apartheid in South Africa.
He was also critical of Israel's decision not to extend its ban on settlement building in the West Bank.
But Anglican Friends of Israel called it "deeply offensive" to compare Israel with apartheid in South Africa.
Dr Barry Morgan called on Israel to adhere to ancient Jewish values and govern with 'wisdom and justice'.
The Archbishop, who is also Bishop of Llandaff, warned that Israel's decision to end the 10-month moratorium on Sunday could jeopardise peace talks and compel moderate Palestinians towards radicalisation.
In a speech at University of Wales Trinity St David in Lampeter, he said: "No-one denies that Israel has the right to exist and defend itself, and it is indeed surrounded by states that want its destruction, and one cannot condone the firing of rockets into Israel by Hamas.
"But the longer things continue as they are then moderate, ordinary Palestinians become more resentful and are in danger of being radicalised.
"Building homes on Palestinian land now at this crucial point in the peace process is only likely to inflame bitterness and resentment."
He added: "The modern state of Israel, if it claims also to be the homeland for the ancient Jewish people of God, must take seriously this vocation as the paradigm nation where justice and wisdom are seen to be done."
His comments follow a speech to the Governing Body of the Church in Wales last week where Gaza and the living conditions of its people were also top of the agenda.
At the most recent meeting in Lampeter, the Archbishop drew parallels between the racial hierarchy of Gaza and Israel and the former apartheid system in South Africa.
He said: "The situation resembles the apartheid system in South Africa because Gaza is next to one of the most sophisticated and modern countries in the world - Israel.
"Whereas Israel has excellent technology and infrastructure, in Gaza people carry goods by horse and cart.
"Whereas Israel has an educational system second to none, next to it children live who are denied even a basic education because their schools have been bombed."
Making an impassioned plea to church members to stamp out injustice wherever they encountered it in the world, he added: "We have a duty to speak out. What happens to one person or nation affects us all."
Israel has occupied the West Bank since the Middle East war of 1967, settling some 500,000 Jews in more than 100 settlements which are held to be illegal under international law, although Israel disputes this. About 2.5 million Palestinians live in the West Bank.
Dr Morgan's remarks have been criticised by the Israeli embassy, where a spokesman called the comments "troubling".
Meanwhile, Simon McIlwaine of Anglican Friends of Israel told the BBC: "It's deeply offensive to compare Israel to apartheid in South Africa — it's clearly not an apartheid state.
"His statements are disgraceful and nonsensical. In South Africa minorities had their rights taken away from them but in Israel all citizens have equal rights."
"Also to suggest the end of the settlement freeze would radicalise Palestinians is nonsense - these settlements are part of the natural development of the suburbs of Jerusalem."