Israel has banned young people from conducting their national service with a prominent human rights group for "inciting against the state of Israel and the Israel Defense Forces (IDF)."

B'Tselem, an Israeli organisation which campaigns against Israeli settlements in the West Bank, was blacklisted as a civilian alternative to serving in the IDF.

The director of the agency in charge of non-military options available to Israeli youths, Sar-Shalom Jerbi, told Israel's Channel 2 that the rights group had been blacklisted because it had "crossed the line in wartime [by] campaigning and inciting against the state of Israel and the Israel Defence Force, which is the most moral of armies".

"The level of intimidation and the broadness of attacks on the organisation over the past three weeks is unprecedented in the 25-year history of B'Tselem," human rights activist Hagai el-Ad said.

Ad cited an internet campaign waged against the group and its employees with death threats and violent attacks also prevalent. He also warned of general violence against Arabs in the Israeli city of Jerusalem.

"Until this day Arabs in Jerusalem are afraid of gang violence against them on the streets of this city. This has never happened before, and still remains the situation in Jerusalem," he said.

B'Tselem requested that Uri Orbach, the minister responsible for the national civic service, reverse the decision to blackmail the group. However, the minister released a statement which said that the group should use its own resources instead of those from the national service.

"Israel is in the midst of a difficult military and diplomatic campaign against terrorists. An organisation that works to prove allegations that Israel is committing war crimes should be so good as to do so with its own resources and not with civilian national service volunteers and state funds," Uri Orbach said.

Earlier this year, B'Tselem refuted the Israeli military's claims that no live fire was used against two Nakba Day protesters whose deaths were captured on CCTV.

The organisation said it had found "strong evidence" that IDF soldiers shot "live ammunition" at the protesters, to the Israeli military's ire.