The Israeli Ambassador to Britain has mounted an extraordinary attack on the Church of England for permitting an anti-Israel carol service that he says will provoke anti-Semitism.

Ron Prosor, who has served in the US and other European states and is fluent in English and German, said that the service at the historic Wren church of St James's, Picadilly, in Central London, had undermined the decades of hard work that has gone into improving relations between the Christian and Jewish faiths.

He accused the Church of England authorities of failing to speak out adequately against the service, an "alternative" event of nine lessons and nine carols that took place at the end of November, and demanded that the Church start to speak out properly against terrorism instead.

Coming hard on the heels of the first trip to Auschwitz by the Archbishop of Canterbury, Dr Rowan Williams — who was accompanied by the Chief Rabbi, Dr Jonathan Sacks — the fall-out from the event is already damaging interfaith relations and now threatens to spill over into a diplomatic row.

At the event, organised by anti-Israel campaigners, including one liberal Jewish group, and with carols rewritten by an unnamed Jewish parody writer, the carol Once in Royal David's City was altered to say "Once in royal David’s city stood a big apartheid wall. . ."

The Twelve Days of Christmas was sung as: "Twelve assassinations/Eleven homes demolished/Ten wells obstructed/Nine sniper towers/Eight gunships firing/Seven checkpoints blocking/Six tanks a-rolling/Five settlement rings. Four falling bombs/Three trench guns/Two trampled doves/And an uprooted olive tree."

The event, Bethlehem Now: Nine Alternative Lessons and Carols was organised by the group Jews for Boycotting Israeli Goods and the pro-Palestinian group Open Bethlehem.

The former Archbishop of Canterbury, Lord Carey of Clifton, is one of the few Christian leaders to have spoken out openly against the event. In a lecture at the London Jewish Cultural Centre yesterday, Lord Carey said that anti-Semitism and hostility to Jews still lurked beneath the surface in Christian circles in Britain.

Referring to the carol service, he said: "Such actions strengthen an anti-Israeli agenda, trivialise the political issues and nourish an anti-Semitic culture. This is not because it is wrong to criticise Israeli policy but because such campaigns single out Israel alone for particular opprobrium and censure it above regimes elsewhere in the world which are genocidal in intent and oppressive to the extreme."

Mr Prosor, speaking to The Times, said: “It was appalling to see a church allow one of its most endearing seasonal traditions to be hijacked by hatred.

“Unfortunately, the criticism from within the Church of England, that should have echoed with bold moral clarity, has instead sounded like a silent night, but far from holy."

If Santa Claus turned up in Bethlehem this Christmas, he would receive a "frosty reception" from Hamas extremists, he said.