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The city council of the Norwegian capital Oslo has said it will next month instruct businesses it deals with not to trade in goods and services produced in illegally occupied areas, in a move hailed by pro-Palestine groups.

The instruction from Oslo City Council will read: "The City of Oslo shall not deal with suppliers whose activities can be linked to serious violations of basic human rights, international humanitarian law, workers' rights or serious environmental damage or corruption.

"This also includes suppliers who directly or indirectly contribute to maintaining illegal occupation," the council's finance department told °®Âþµº via email on Wednesday.

Asked if the measure affected only territories illegally occupied by Israel, the department said it "applies equally to any territory occupied in violation of international law".

"The City of Oslo expects our suppliers to respect basic human rights and international law. When we procure, we are absolutely clear not to trade with companies that indirectly or directly contribute to maintain illegal occupation or buy goods or services produced in occupied territory."

The Boycott, Divestment and Sanctions (BDS) National Committee, a Palestinian initiative aiming to put economic pressure on Israel, said on Tuesday that it "warmly welcomes" the decision.

"[Oslo's] procurement policy will exclude companies that directly or indirectly contribute to Israel's illegal settlement enterprise – a war crime under international law," the BDS National Committee said in a statement.

The coalition said it "salutes the tireless work of Norwegian grassroots groups, trade unions and parties that have made it possible".

It noted the Spanish city of Barcelona recently cut off relations with Israel. It said Oslo's decision "rejects complicity and promotes human rights".

"We call on cities worldwide to sever ties with apartheid Israel to support the Palestinian quest for freedom, justice, and equality," the coalition added.

"Let's escalate #BDS campaigns now to #DismantleApartheid!"

There are approximately 700,000 Israeli settlers living in the occupied West Bank and East Jerusalem in hundreds of illegal settlements.

To protect the settlers, Israel maintains a harsh military rule over the approximately three million Palestinians living in these territories.

So far this year, Israeli forces and settlers have killed more than 100 Palestinians.

Settlements are viewed as a key barrier to a permanent solution to the occupation of Palestinian territory.