The council of the 40,000-member Association of University Teachers decided on Tuesday in a special session to overturn the boycott immediately. The measure, which had drawn vocal criticism, was put in place last month.
Britain's biggest university teachers union had met to reconsider its boycott of two Israeli universities.
The 40,000-member Association of University Teachers voted last month to boycott Haifa and Bar Ilan universities for actions that it said undermined Palestinian rights and academic freedom.
At the same time it referred a motion to its executive committee to boycott the Hebrew University of Jerusalem.
The union said its council was meeting on Thursday in central London to hold another debate on the boycott.
Jason Pearlman, a spokesman for the Board of Deputies of British Jews, attending a protest outside the meeting, said the boycott's original sponsor appeared to have little interest in promoting constructive dialogue in the Middle East.
Jewish groups have criticised
the ban as being biased
"Boycotts of academic establishments are really a first step of McCarthyism, (and are) dangerous, biased and slanted," he said.
Britain's Foreign Office last week praised the union's decision to reconsider the boycott.
"As a friend of both Israel and the Palestinians, we believe that we can best encourage both sides to take the steps needed for progress through close engagement to achieve a peaceful resolution," Foreign Office minister Kim Howells said.
Haifa was targeted because the union said the university was threatening to fire an Israeli political science lecturer for supporting a student's research into allegations of killings by Israeli troops.
Bar Ilan was sanctioned for its links to the College of Judea and Samaria, in the illegal Jewish settlement of Ariel in the occupied West Bank.
Union members also said the Hebrew University of Jerusalem had bulldozed Palestinian homes to make room for new college buildings.
"We believe that we can best encourage both sides to take the steps needed for progress through close engagement to achieve a peaceful resolution"
UK Foreign Office Minister Kim Howells
The Israeli universities say many elements of those allegations are false and have condemned the boycott, calling it shameful and a blow to academic freedom.
The universities said they did not expect the boycott to have any immediate effect but they saw it as symbolically important.
One prominent Palestinian's opposition to the boycott has
prompted a strong reaction in the Palestinian territories.
Palestinian university teachers called for Sari Nusseibeh, the president of Jerusalem-based Al Quds University, to be fired for violating a boycott by signing a cooperation agreement with an Israeli school.
In a symbolic move aimed directly at the British boycott, Nusseibeh issued a joint statement in London on 19 May with Menachem Magidor, the president of Jerusalem's Hebrew University, calling for continued academic ties between their institutions.
They said cooperation, not boycotts, will solve the two people's problems.