The Archbishop of Canterbury has written to the Chief Rabbi regretting as "unfortunate" the Church of England’s decision to review its investments in Israel.

In his carefully crafted letter, Dr Rowan Williams, who voted in favour of the motion, denies that it represented a decision to disinvest at a time when anti-Semitism is on the rise and a Hamas administration committed to the destruction of Israel is preparing for power.

The General Synod is facing wide criticism from senior church leaders, including the former Archbishop of Canterbury Lord Carey of Clifton, for voting to disinvest from Caterpillar, the US company that manufactures the tractors used in land clearance in the Occupied Territories.

The Council of Christians and Jews also condemned the motion as "wholly regrettable".

However, Dr Williams defends the synod as merely urging the Church of England "to engage with companies about whom we had concerns and, specifically, to encourage a fact-finding visit to the Holy Land."

In his letter to Sir Jonathan, the Archbishop of Canterbury says: "The Synod has not, by this action, resolved to disinvest."

Dr Rowan Williams says: "It is specially unfortunate that this has arisen at a time when, as we are well aware, anti-Semitism is a growing menace and when the State of Israel faces some very particular challenges not only in respect of the new administration in the territories administered by the Palestinian Authority but also elsewhere in the region."

He continues: "I must repeat that no-one in the Synod would endorse anything that could even appear to endorse terrorist activities or anti-Semitic words or actions. But there is a real concern which we hope our Jewish and Israeli colleagues will help us address honestly and constructively."

In the letter he says: "The majority in the Synod was clearly particularly unhappy with the idea of the church profiting from one specific and controversial security policy.

"The demolition of Palestinian homes in recent years has been a regular source of controversy, and raises moral issues of some seriousness.

"To register our concern over this and to review whether we should or could continue with an investment policy which appeared to accept something with which we were deeply uneasy is emphatically not to commend a boycott, or to question the legitimacy of the State of Israel and its rights to self-defence; least of all is it to endorse any kind of violence or terror against Israel and its people, or to compromise our commitment to oppose any form of anti-Semitism at home or abroad.

"No-one in the Synod would have an instant’s sympathy with any such hostility to the Jewish people or the State of Israel as such, and I believe that this was made clear in the actual debate in synod, where concerns were raised and fully accepted about the sufferings of Jewish communities as well as others in the Holy Land."

In the motion, Keith Macouronne of the Guildford diocese, moved that the synod "heed the call from our sister church, the Episcopal Church in Jerusalem and the Middle East, for morally responsible investment in the Palestinian occupied territories and, in particular, to disinvest from companies profiting from the illegal occupation, such as Caterpillar Inc, until they change their policies." The synod voted overwhelmingly in favour.

Dissenting voices included the Bishop of St Albans, the Right Rev Christopher Herbert, chairman of the Council of Christians and Jews.

In spite of the Archbishop of Canterbury’s denial that this is the case, the motion is being interpreted as a call to disinvestment.

In a comment to The Times, Sir Jonathan Sacks said: "This is a welcome and helpful clarification. Only those who hear the fears and hopes of both sides in a conflict can be a force for peace. It is important that Christians in Britain should have the chance to listen to the fears of Jews in Israel, the work Jews are currently doing to rebuild the Palestinian economy, and our concerns at the election of a Palestinian administration committed to the destruction of Israel as a state."

He continued: "I hope that this process of mutual understanding will bind Jews and Christians in Britain closer in friendship."

He said the emphasis should be on sending a message of co-existence from Britain to the Middle East, rather than importing conflict from the Middle East to Britain.

"It would be awful if this [debate] damaged the friendship we have worked so hard to build up."

Times Recommends

• Times Charity Appeal: SolarAid
• Is it Black Monday all over again for Dubai?
• Behind the scenes at the biggest deal