Britain should step up pressure on Israel to stop building illegal settlements in the West Bank by pressing for greater Europe-wide transparency on food exported from the occupied territories, Yvette Cooper says today.

In an interview with the Guardian, she calls on the government to persuade the EU to introduce labelling that would identify goods produced by Israeli settlers.

Cooper, who spoke after her first visit to the Middle East as shadow foreign secretary, wants the EU to follow the example of supermarkets which identify goods produced in the occupied West Bank.

Labour is opposed to boycotting Israeli goods but Cooper believes consumers should be informed whether products are produced by illegal settlers.

Labour introduced voluntary guidelines last year which stated the labels should distinguish between "Israeli settlement produce" and "Palestinian produce". Until the guidelines foods were labelled "produce of the West Bank".

Israel claimed the guidelines would encourage a boycott. Ministers believed transparency over labelling was one of the few levers Britain has over Israel as it expands illegal settlements.

Cooper said: "There is still a worrying lack of urgency in the peace process.

"The work to build an effective Palestinian government and economy, including security co-operation with Israel, ... needs parallel political progress through peace talks to sustain the momentum towards a two state solution.

"The continued building of settlements in the Occupied Territories is illegal and a serious obstacle to peace. If EU member states can speak with one voice, including guidance to retailers on produce from settlements in the West Bank, it will send a strong signal on how important this is.

"Consumers should be able to choose what produce they buy. That includes knowing exactly where it came from and having access to all markets, including Gaza whose population is still unable to export to the wider world."

Cooper expressed regret that David Miliband, her predecessor as shadow foreign secretary, stood down from the frontbench after losing the Labour leadership.

"It would have been great if David had stayed in the shadow cabinet because he's really talented but I understand his decision … but you're right, it's bad for the party to be divided, it's bad for the party to be consumed by personality rows, but it's also bad for the party to not have internal debate and an election."