By Richard Black
Environment correspondent, BBC News website
Mrs Gisladottir fears whaling may harm Iceland's long term interests
Iceland's whalers have embarked on this year's hunt with the country's foreign minister warning that whaling may damage Iceland's "long term interests".
Boats left to begin the hunt on Tuesday after the fisheries ministry issued a quota of 40 minke whales for 2008.
Officials say the hunt is sustainable and justified by market demand.
The British government and several environmental groups joined foreign minister Ingibjorg Solrun Gisladottir in criticising the decision.
"It is clear... that the ministers of the Social Democratic Alliance (SDA) do not support the decision," she said in a statement.
"I believe this is sacrificing long term interests for short term gains, despite the quota being smaller than in previous years."
Mrs Gisladottir's SDA is a junior member in the coalition government, whereas prime minister Geir Haarde and fisheries minister Einar Kristinn Guofinnsson belong to the more conservative Independence Party.
Environmental groups suggest the continuation of whaling may threaten Iceland's candidacy for a seat on the UN Security Council.
A spokesman for the UK's environment ministry Defra said: "The UK is again deeply disappointed at Icelandís decision to issue a quota for 40 minke whales for 2008.
"We would like to make clear our country's opposition to this unnecessary, inhumane operation, and urge the government of Iceland to reconsider its position and reverse its decision."
This will be the third hunting season since Iceland resumed its commercial programme in 2006.
The whalers had been expecting a decision a month ago, and had asked for a quota nearer to 100.
Iceland's annual catch is much smaller than those of Norway and Japan, but its hunt is nevertheless controversial, partly because it had ceased operations and partly because, in some peoples' eyes, the policy conflicts with the image Iceland often portrays as an unspoiled, ecologically conscious "green" nation.
"We strongly urge the Icelandic government to rethink this decision," said Robbie Marsland of the International Fund for Animal Welfare (Ifaw).
THE LEGALITIES OF WHALING
Objection - A country formally objects to the IWC moratorium, declaring itself exempt. Example: Norway
Scientific - A nation issues unilateral 'scientific permits'; any IWC member can do this. Example: Japan
Aboriginal - IWC grants permits to indigenous groups for subsistence food. Example: Alaskan Inupiat
"The resumption of commercial whaling could prove to be extremely damaging to the already fragile Icelandic economy and its international reputation."
The economy is already struggling owing to large borrowing by its three major banks which exposed them to the international banking crisis.
Inflation is running above 11%, and interest rates are up to 15%.
Environmental groups suggest the whaling decision may add to pressure on the economy.
"Iceland's fishing industry is essentially an export economy," commented Sue Fisher, whaling campaigner for the Whale and Dolphin Conservation Society (WDCS).
"Iceland's fishers need to remember that many consumers simply will not want to buy fish from sources that are linked to killing whales."
However, the fisheries ministry believes there is no ecological reason to cancel a hunt for 40 minkes when the population in the North Atlantic is believed by the International Whaling Commission (IWC) to number about 174,000.
"There can be no question that this is a sustainable activity," said Iceland's whaling commissioner Stefan Asmundsson.
There is no quota for fin whales, another target of Icelandic vessels.