Diplomats were seen leaving the nearly 200-year-old British consulate in East Jerusalem Thursday, the deadline for their expulsion that had been ordered by Israel in retaliation for Britain’s sanctions on goods and services from Judea and Samaria.

The U.K.’s national security adviser, Jonathan Powell, quietly visited Israel last week to discuss a solution that would prevent the closure of its consulate, but the U.K. did not publicly disclose the visit. Israel held firm but agreed to allow seven workers to remain in exchange for Britain allowing Israel’s 27 diplomats to remain in Britain. The consulate has been downgraded to the U.K. Mission, and workers removed the previous signage Thursday.

The spat between Jerusalem and London unfolded after Britain announced measures against Judea and Samaria in September to punish Israel for its proposed construction in Section E1 near Maale Adumim in Judea and for its alleged failure to crack down on settler violence.

The day after British Foreign Secretary Ed Miliband announced the United Kingdom’s intent to sanction Judea and Samaria, the U.K., France, and Canada issued a joint statement about the ban, followed by another joint statement on the ban by Canada, France, the U.K., Denmark, Finland, Iceland, Ireland, Norway, Poland, Portugal, Spain, and Sweden, in which they signaled that they had already implemented or were planning to implement measures against the region.

Eight Muslim countries praised the sweeping ban on all goods and services in Judea and Samaria.

Israel retaliated by giving the British government 30 days to close its consulate, ordering British officials at the U.S.-led International Gaza Support Center in Kiryat Gat to cease operations, and canceling the British Support Team that trains Palestinian Authority police in Ramallah.

Miliband struck a defiant tone Thursday, stating that “We have been clear that we do not accept that the Government of Israel has the legal right to close the British Consulate General in Jerusalem, which has been there for nearly 200 years.”

“The UK Government reiterates its long-standing view that East Jerusalem is occupied territory,” he said.

“Following discussions with the Government of Israel, our Consulate General building will not be closing, and will be known as the UK Mission, Jerusalem from today,” he continued. “The UK Mission, Jerusalem is independent, operational and will continue to deliver vital services and our work with the Palestinian people.”

An Israeli diplomatic source said in a statement to The Daily Mail, “The British consulate is closing. It will no longer have the diplomatic standing of a consulate, nor will it provide consular services. Its operations will be drastically reduced, with diplomatic staff cut from 27 to just seven.”

“This decision comes in response to a series of anti-Israel measures taken by the Labour Government, including its recognition of a Palestinian state, renewed funding for the United Nations Relief and Works Agency for Palestine Refugees, sanctions and restrictions on Israeli arms,” the source continued, adding that the “British mission has been operating under Israeli diplomatic privileges and permissions while pursuing policies that Israel considers unilateral, biased and hostile to the state. We are no longer prepared to allow that arrangement to continue.”

Israel’s order to close the East Jerusalem consulate does not affect the British Embassy in Tel Aviv, and Israel encouraged the 30 diplomats it expelled from East Jerusalem to move to the Tel Aviv embassy and continue working from there.

Prime Minister Benjamin Netanyahu criticized the British government for its hypocrisy in accepting Israeli intelligence that averted the recent foiled terrorist attack on RAF Fairford, which saved an untold number of British lives, while sanctioning Judea and Samaria and engaging in incendiary anti-Israel rhetoric.

“It’s mind-blowing hypocrisy. I don’t know how many lives we have saved giving Britain information about impending attacks,” Netanyahu said.

“They’re appeasing, they’re attacking Israel, [the country] that is fighting the terrorists in the terrorist regime that is attacking them. They appease their enemies, and they attack their protectors, really. That’s what’s happening. But this is a twist of both logic and justice. It doesn’t serve Britain well, it doesn’t serve the world well,” he added.