What do The Pixies, Elvis Costello, and Salam Fayyad, Prime Minister of the Palestinian Authority, have in common? A cursory glance might suggest not much yet all have deeply irked Israel.

When Mr Fayyad first embarked on a door-to-door campaign to persuade Palestinians to shun all products made by Jewish settlers, the Israeli public simply shrugged. But when veteran crooner Costello peered into his conscience and pulled a scheduled appearance in Tel Aviv, Israelis sat up and took notice.

Embattled and increasingly isolated, a group of politicians are now proposing a bill that would outlaw boycotts against the Jewish State, both homegrown and international.

The Land of Israel, a right-wing parliamentary lobby group committed to Jewish settlement of the West Bank, submitted the bill with the support of 25 politicians from right wing and centrist parties. If approved, it could theoretically force the Palestinian Authority (PA) to pay thousands of dollars in compensation to Jewish businesses affected by the Fayyad-led boycott campaign, a scenario that would likely spark furious reaction from Palestinians.

The move comes amid a growing global backlash against Israeli policies, which has intensified since Israel launched its bloody raid on a Turkish-led humanitarian convoy trying to breach the blockade of the Gaza Strip.

Even before the flotilla affair, a campaign to persuade artists and authors to protest what they describe as an illegal and oppressive military occupation of the Palestinian territories was gaining ground. "Merely having your name added to a concert may be interpreted as a political act... and it may be assumed that one has no mind for the suffering of the innocent," Costello said in a statement prior to the raid.

After last week's deadly raid on the flotilla, US rock band The Pixies cancelled their gig. Several other bands have followed suit, prompting Israeli music promoter Shuki Weiss to complain that performers are waging a form of "cultural terrorism".

Human rights activists, meanwhile, decried efforts by politicians to alienate those critical of Israel with new legislation. "We have wild right-wing politicians presenting wild demagogic bills ... which create a very nasty public atmosphere," said Adam Keller, spokesman for Gush Shalom, an Israeli NGO that has joined calls for a boycott of settler-made goods. "If this is passed into law, it would mean a total breakdown between Israel and the PA."

Israel has condemned Mr Fayyad's boycott campaign as harmful to the fragile peace process, and Israeli settler leaders have urged the government to respond with harsh retaliatory measures.

Should the proposal gain traction in its current form, it would force boycotters to pay compensation to settlers who claim their business had suffered. It would also affect foreign citizens calling for a boycott of Israel, potentially barring them from Israel for 10 years.

But activists said attempts to muzzle peace activists would make the movement stronger. "No Knesset laws can stop this tide of non-violent, morally consistent struggle for justice, self determination, equality and freedom," political activist Omar Barghouti said in a statement.

Mr Fayyad, an economist by training, has provided the boycott campaign with fresh impetus in recent weeks, putting it at the heart of a peaceful resistance movement aimed at winning over international support. The boycott calls for Palestinians to shun all products made in the Jewish settlements, most of which sit on expropriated Palestinian farmland and are regarded as illegal under international law.

The PA has also barred Palestinians from working in the settlements as of the end of this year, an unpopular move only slightly eased by the promise of a $50m "dignity" fund designed to help workers make the transition. The PA has threatened those who fail to comply with fines.

The Jewish settlements, which sit atop the West Bank hills, have long been a thorn in the side of the peace process. Palestinians have maintained that as long as Jews are grabbing Palestinian land in the West Bank, Israel cannot be committed to a two-state solution.

"If I... were a Palestinian, I would certainly join the boycott that is being imposed on the settlements and their products," wrote Yossi Sarid, a commentator in liberal Israeli newspaper Ha'aretz. "After all, it would not be human to expect me to buy my tombstone from people who were determined to bury my hopes for a good life and independence."

Israeli Minister of Minority Affairs, Avishay Braverman, who is responsible for Israel's Arab population, said the boycott was a diversion from the pressing need for direct peace talks between the Israelis and Palestinians. US-sponsored efforts have brought both sides back to talks, but not in the same room.

"This boycott will have no real impact on Israel, but will harm Palestinian workers," said Mr Braverman, a former World Bank economist. What it will do "is create a more general boycott on Israel that will harm relations between Israel and the Palestinians".

And not everyone is moved, Rod Stewart, Elton John and Diana Krall, who is married to Costello, are still scheduled to perform in Israel later this year.

Meanwhile, authors Margaret Atwood and Amitav Ghosh, the joint recipients of an Israeli literary award, have bristled at calls from activists to refuse the prize, with Atwood describing cultural boycotts as "a form of censorship".