The FBU condemns Israel for its offensive in Gaza in January
Union members have voted to support a boycott of goods produced in Israeli settlements in the occupied territories.
Delegates at the TUC in Liverpool backed the move in protest at Israel's military campaign in Gaza in January.
They also supported calls to withdraw investment from some Israeli companies.
But suggestions of a wholesale boycott of all Israeli goods and services were blocked by the TUC's general secretary Brendan Barber.
He said: "This is not a call for a general boycott of Israeli goods and services which would hit ordinary Palestinian and Israeli workers, but targeted, consumer-led sanctions directed at businesses based in, and sustaining, the illegal settlements."
All Jewish settlements in the West Bank are illegal under international law, though Israel disputes this.
The idea of a boycott has divided the union movement and on Wednesday, leaders were forced to suspend a debate on the issue after heated exchanges between senior officials.
The motion was originally proposed by the Fire Brigades Union (FBU) and also called for an end to arms sales to Israel and the suspension of official links between British and Israeli trade unions.
It was backed by the Unite and Unison unions, but the GMB called the motion "incredibly divisive" and "way beyond the logic of where we should be".
Despite objections, however, the motion was passed, and afterwards the TUC said in a statement that the boycott would target "agricultural products that originate in illegal settlements" in the West Bank, including dates, herbs, fruit and vegetables.
Palestinians and human rights groups say more than 1,400 Gazans were killed during the three-week operation at the start of this year. Israel puts the figure at 1,166.
FBU president Mick Shaw told delegates there had been "unbelievable human suffering", adding: "We have a history of supporting boycotts, such as the one against apartheid in South Africa.
"There is no doubt that had an effect."
Israel's deputy ambassador in London said on Wednesday that such a move would not help prospects of peace in the region and would harm both Israeli and Palestinian workers.
But Hugh Lanning, chairman of the Palestine Solidarity Campaign, said it was a "landmark" decision.
The TUC is an umbrella organization of 58 British unions, representing about 6.5 million workers.