* Israel says will lodge protest with South African envoy
* Pretoria says consumers must know true product origin
By Allyn Fisher-Ilan
JERUSALEM, Aug 23 (Reuters) - Israel accused South Africa on Thursday of behaving like an apartheid state by requiring Israeli goods made by West Bank settlers to be labelled as originating from occupied Palestinian territory.
The rhetoric is likely to strain Israel's relations with South Africa, whose ruling African National Congress fought to end the apartheid regime.
The ANC had strongly backed the Palestinian cause while Israel was one of the few countries to have strong ties with South Africa's white-minority government, which relinquished power in 1994.
Israeli trade with South Africa is modest but the impact of Pretoria's decision on goods-labelling has raised Israeli concern that other states could follow suit and bolster calls by Palestinians to boycott Israeli products made in the West Bank.
The European Union grants a tariff exemption to imports from Israel but not to those coming from the West Bank and other territory Israel captured in the 1967 Middle East War.
The Israeli Foreign Ministry said it would summon South Africa's ambassador to lodge a protest over the decision on labelling goods from Jewish settlements in the West Bank.
"Unfortunately it turns out the change that has begun in South Africa over the years has not brought about any basic change in the country, and it remains an apartheid state," Deputy Foreign Minister Danny Ayalon said in response to Pretoria's move.
"At the moment South Africa's apartheid is aimed at Israel," added Ayalon, a nationalist hardliner in right-wing Prime Minister Benjamin Netanyahu's governing coalition.
Ayalon did not elaborate on what he meant by associating the labelling decision with apartheid.
There was no immediate response from South Africa.
The South African government said on Wednesday the cabinet had approved a measure "requiring the labelling of goods or products emanating from IOT (Israeli-occupied territory) to prevent consumers being led to believe that such goods come from Israel."
When Pretoria first proposed the measure in May, Israeli Industry and Trade Minister Shalom Simhon said it would be a problem if other countries did the same thing.
Israel criticised Britain in 2009 for advising supermarkets to label produce from Jewish settlements clearly, to distinguish them from goods produced by Palestinians.
The World Court has ruled that Jewish settlements in the West Bank are illegal under international law and Palestinians say they will deny them the viable state they seek in the territory and in the Gaza Strip.
Israel says the future of settlements should be decided through peace talks, which have been frozen since 2010, largely over the settlement issue.
Israel withdrew settlers from Gaza in 2005. About 2.5 million Palestinians and 500,000 Israeli settlers live in the West Bank and East Jerusalem, which Israel also took in the 1967 war.