It's hard, sitting on the other side of the office table from which Naomi Chazan is picking at her modest hummus and salad snack lunch, to believe that the amiable 63-year-old university professor with a self-deprecating sense of humour has suddenly become the most discussed, not to say demonised, woman in Israel.

Ms Chazan is president of a long-established agency with large numbers of Jewish donors in the US and Britain, which is committed to fighting for "social justice and equality for all Israelis". The New Israel Fund has over the last 30 years disbursed some $200m to around 800 charitable, social and human rights groups, and justly claims much of the credit for building modern Israel's still vibrant civil society.

But in the last fortnight the former Knesset member who by her own account loves her native Israel "without reservation" has been sacked as a columnist on the Jerusalem Post after 14 years, had rowdy demonstrators outside her house brandishing a chilling caricature of her with a horn obtruding from her forehead, and most far-fetched of all, been accused, in a newspaper article circulated to foreign journalists by the Government Press Office, of "serving the agenda of Iran and Hamas".

The onslaught has prompted Nicholas Saphir, the Jewish businessman who runs the New Israel Fund in the UK, to warn that the "Jewish values of social justice and our duty to tikkun olam (repairing the world) have come under serious threat in the state of Israel".

The row has come to symbolise a new mood of establishment intolerance in Israel towards criticisms by Israeli human rights groups of such episodes as last year's military operation in Gaza. This harsh new mood has been fuelled by ministers, right-wing politicians and military figures who have closed ranks behind accusations that the UN-commissioned report into the war, led by Richard Goldstone, which accused both sides of war crimes, is being used to "delegitimise Israel".

The NIF's travails began when a right-wing group called Im Tirtzu provoked accusations of latterday McCarthyism by charging that "without the NIF there could be no Goldstone report and Israel would not be facing international accusations of war crimes". It is a charge which Abe Foxman, director of the US-based Anti- Defamation League and no great friend of the Israeli left, told New York Jewish Week was "absurd".

Ms Chazan does not herself talk about McCarthyism –though several of her agency's defenders, including Isaac Herzog, a Labour party minister in the governing coalition, have done so. But she told The Independent: "Every country has its own version of things but the general climate is very problematic. It's ugly." She said the mood reminded her of the hate-laced run-up to Yitzhak Rabin's assassination in November 1995. "But it's different, because that was an avowedly political disagreement. This is the beginning of a rather systematic campaign against really the very essentials of Israeli democracy."

Ms Chazan cites the arrests of Israelis at demonstrations against the encroachment of Jewish settlers in the Arab East Jerusalem district of Sheikh Jarrah. And the interrogation and fingerprinting last month of her friend Anat Hoffman, of the reform group Religious Action Centre, who for 20 years has challenged ultra-Orthodox control of the Western Wall by seeking to entrench the right of women to pray in shawls there.

"There is an assault on the basics of law and order but most important I see this as part of a very pernicious attempt to stifle alternative voices, and most seriously to equate criticism with betrayal. And there is a very strong political underpinning to that. I would go further ... behind this [is] a group of people who don't want a political settlement. They don't want peace, so they're trying to delegitimise the human rights movement."

She says that Im Tirtzu "expropriated" the term Zionism while "probably acting in the most anti-Zionist way I can imagine. They forgot to read the [1948] Declaration of Independence which talks of equality of all citizens of race, colour, creed, gender, nationality, etc. They also forgot the chapters in the Declaration where Israel extends its hand to its neighbours, they forgot basic democratic principles. They are hellbent to denounce anyone who dissents from the government line. Or dissents from their definition of what being a loyal Israeli is. That is ridiculous. Democracies are all about disagreements."

She herself is a Zionist? "Right now they debased the term. Am I someone who believes that Israel has the right to exist as a democratic state with a Jewish majority? My answer is a resounding yes. Just as the Palestinians have the right to a Palestinian state with a Palestinian majority alongside Israel. And I think in that regard I express the view of the vast majority of Israelis."

The NIF, excoriated by a series of right-wing columnists, has seen off- – for now – the prospect of a parliamentary commission of inquiry into its activities. And Ms Chazan welcomes the alternative prospect that a Knesset subcommittee will launch a probe of foreign funding of NGOs. But she adds: "We hope, are insisting, that they investigate the funding of all NGOs, including the NGOs of the right."

Indeed Im Tirtzu, whose chairman was a prominent opponent of Ariel Sharon's withdrawal of settlers from Gaza and has received funds from – among others – John Hagee Ministries, run by an ultra-conservative evangelical US pastor who has appeared to argue that the Holocaust was a good thing because it created the state of Israel.

The organisation's accusations were based on a curious reading of the footnotes of the Goldstone report claiming that 92 per cent of those citing "non-official" Israeli sources came from human rights organisations supported by the New Israel Fund.

In fact NIF-supported groups account for only 14 per cent of citations in Goldstone, and many of these do not deal with Gaza at all, and even include references that are not critical of Israeli policy. Moreover while the main human rights organisations, from the Association of Civil Rights in Israel to the army veterans' group Breaking the Silence, are supported by the NIF, as well as by European governments, they absorb less than 10 per cent of its funds, which also go to new Jewish immigrants, disabled, and women's groups, among many others.

Human rights groups funded by the NIF were early advocates of an independent Israeli investigation. But the widely respected B'Tselem, for example, while tireless in highlighting Palestinian civilian deaths, has questioned the Goldstone conclusion that the Israeli military set out to target civilians. Ms Chazan strongly endorses the groups' calls for the independent investigation which the Israeli government has so far resisted. "Israel has investigated every war since 1973. This is the first war where we have not set up an investigation. That's hard to understand."

Had the Netanyahu government helped to create the space for the right-wing onslaught on the NIF? "Look, it hasn't denounced this vilification; and therefore draw your own conclusions."