The Co-Operative Group, a British supermarket chain, is extending a boycott of goods from illegal Israeli settlements and will now shun any supplier known to source from these areas, a statement has said.

"Following an audit of the Group's supply chain, it will no longer do business with four companies, accounting for £350,000 ($560,000) worth of sales, as there is evidence that they source from the Israeli settlements in the Palestinian occupied territories," the statement said.

The UK's fifth-largest food retailer has not bought goods from the settlements since 2009, it said, but does trade with about 20 Israeli businesses that do not source from the settlements.

"The Group will also continue to actively work to increase trade links with Palestinian businesses in the occupied territories," it added.

The UN Human Rights Council in March passed a resolution ordering a first investigation into how Israeli settlements may be infringing on the rights of the Palestinians.

Israel approved another three settlements in the occupied West Bank on Monday, a move that UN Secretary-General Ban Ki-Moon said left him "deeply troubled".

The three outposts will now join some 120 settlements dotted across the territory that are home to more than 342,000 people.