In recent weeks, the foundation has received two rejections from British academics to review an application. In one, received last month, the unnamed academic describes his "utmost respect" for the academic whose grant he's been asked to review, but refuses on the basis that it is Israeli money and he disapproves of their government's actions towards the Palestinian people. "I hope you understand this is nothing personal," he adds.

The second, also received last month, again says the author won't review the proposal. "I support the academic boycott of Israeli academic institutions, as a means of registering my protest against Israelis' lack of respect for human rights and continuing illegal occupation of Palestinian land."

Almost three years ago to the day, moves towards an academic boycott of Israel began in earnest when a moratorium on European funding for Israeli research was suggested by Steven and Hilary Rose and 120 other academics, in a letter to the Guardian. The issue has burst on to the front pages intermittently: when Umist's Mona Baker sacked two Israeli linguists from a translation journal she edited; when Oxford's Andrew Wilkie refused a place to an Israeli PhD student; and last year, when the School of Oriental and African Studies hosted a conference on the subject entitled Resisting Israeli Apartheid: Strategies and Principles.

Behind the scenes, its leading campaigners in the UK, France, the Occupied Territories and Israel, have been refining what an academic boycott is, what the arguments are, and whose support they really have. That debate, which has existed mainly in email exchange groups, obscure online publications and weblogs, is about to be aired very publicly. In two weeks time, in Eastbourne, the Association of University Teachers will debate, once again, whether to adopt a form of the boycott as official union policy.

Bosses at the AUT would be forgiven for having the jitters. There are plenty of other issues on the agenda at their annual council. Not only are they going to have to decide what to do about a year-old pay deal that many universities have failed to implement, but there will be the first vote on whether to merge with Natfhe. But ahead of council, some of the most serious political manoeuvring has focused on the international debates and, specifically, what to do about Israel.

The boycott motion, jointly proposed by Birmingham and Open universities, seems relatively mild compared with the one they submitted two years ago, which called for a full boycott and was defeated after an intense debate. The new motion asks the AUT to recognise two key developments in the past six months: the establishment of the British Committee for Universities in Palestine (Bricup), with a renewed call for the boycott that excludes Israelis who are critical of their government's actions; and the publication by around 60 Palestinian academic unions and non-governmental organisations of a statement of support for the boycott.

But rather than committing the union to a boycott, the only action the motion requires is that the full text of the Palestinian call be circulated to all AUT members. The final motion is significantly softened compared with previous drafts, which called for a full boycott.

"It's a tactical attempt to get it through," admits Birmingham's Sue Blackwell, one of the motion's authors. "We've got to be a bit more sophisticated. We are now better organised. One of the reasons we didn't win last time was that there was no clear public call from Palestinians for the boycott. Now we have that, in writing."

There are three further motions which make allegations against three Israeli universities. One, against the Hebrew University in Jerusalem, claims it confiscated land from Palestinian families to expand its buildings. The charge is vigorously denied by the university. Another motion claims that Haifa University is restricting the academic freedom of researchers whose theses were critical of the Israeli state. The allegation is also strongly denied by the universitiy which says it is "unequivocally supportive of the rights of academic freedom". In the third motion, Bar Ilan University is said to be supervising degrees in partner colleges in the disputed West Bank. Education Guardian had been unable to get a response by the time it went to press.

The facts are likely to be contested in the debate at the union's annual council. All three motions call for the AUT to boycott the institutions until they change their policies. If all three are passed, three out of eight of Israel's universities, including the biggest and arguably most internationally renowned, would be boycotted.

Blackwell says: "To call for a general boycott of all Israeli institutions, without specifying the reasons, is harder for people to swallow."

The union's executive, which, two years ago, refused to recommend the boycott call to conference, independently tabled its own motion on the subject - before the OU/Birmingham move - pointing out the recent ceasefire and offering support to Palestinian academics working in difficult and dangerous conditions. But, in what sounds like a warning, albeit shallow, to both the Israelis and the members who want a boycott, it adds: "Council also recognises that the peaceful resolution of the problems facing the Middle East will not be brought about by the erection of barriers, but by open dialogue."

It's an issue that threatens to divide the union at conference this year. Two years ago, an out and out boycott was rejected by a majority of about two to one. Blackwell is hopeful of winning over another third with the changes made this year, not least with the support of the Palestinian call for a boycott, which, she argues, adds legitimacy.

That call does seem to have the backing of Palestinian academics. An internal survey of staff at the Palestinian Al-Quds University, seen by Education Guardian, reveals that 75% support a boycott. Some 76% agreed that working with an Israeli would compromise the boycott, and 73% said that such co-operation was "against their national interest".

Omar Barghouti, one of the founders of the Palestinian campaign, says that support is replicated at other Palestinian universities, but that there is still a debate about whether they are going about it the right way. "Most of the debate is pragmatic - does this help us or not? Will isolating Israel make it more aggressive? Should we try to win over Israelis by trying to collaborate?"

The effect so far on Israeli institutions is just as complicated. "There hasn't been much actual boycotting yet. We're hoping the AUT will break new ground there," says Barghouti.

"But the psychological impact is substantial. If we take things in perspective, it has not been widespread, but the very idea of boycotting Israel has shocked the academic milieu and made many people think."

Blackwell says that over the past three years the boycott has been as active as ever, but on a quiet and individual level - "a covert boycott where people are quietly getting on with it. It's a passive boycott that dares not speak its name".

Dr Tamar Jaffe-Mittwoch, director of the Israel Science Foundation (ISF) says that passive boycott has been "very painful".

"We've had about a dozen people refuse to work for us, in the previous two years there were more. It wasn't big, but, conceptually, it was a shock. The shock is that the academic world is being contaminated with politics. We feel academia is something that should be pure."

It could be that there were fewer rejections in this year's round of grant application reviews, but it could also be that they've stopped approaching people who have already refused. "We don't go back to someone who has refused to cooperate with us. As time goes by, we might get the courage - the chutzpah as we say - to go back and ask them again," says Jaffe-Mittwoch.

The ISF's rejection letters aren't grand gestures. Nearly all begin with a polite "thank you for the invitation, but ..." before concisely setting out the author's backing for the boycott.

Hilary Rose, the co-author of the original boycott call, says: "One of the reasons we have to recognise is that we're out of a period of huge collectivism and into this individual action; under that, there is a massive boycott going on. Trade unions still have a vigorous and important place, but it's simply not as strong as it was."

Professor Nachman Ben-Yehuda is dean of social sciences at the Hebrew University, one of those targeted by the AUT motions. He also says there have been isolated cases of boycott-style actions against the university over the past two years. A full boycott against the university would be "enormous" he says.

"It would be damaging. There would be severance of all relationships, and there is lots of crossover from the UK to here. It would be enormous."

He acknowledges that there is a broad debate within Israeli institutions: some who support a boycott; many who, like Jaffe-Mittwoch, don't think politics has a place in academia; and others who believe it to be an attack on Jewish people and the state of Israeli.

His own opinion is clear: "It's very unfortunate. If they do call for it and it's successful, then what problem would that solve? I think it's right to criticise a country or university if it does something wrong, I think we should be criticised for things we shouldn't be doing. But to say we won't talk any more goes against something very very basic. We solve problems through dialogue."

A boycott could also have unintended consequences, he adds: "What will happen is that it will make us lean more and more on the United States. Personally, I think that would be very disappointing."

Bhargouti, naturally, disagrees: "The academic boycott has a significant importance. Israel gains a lot of legitimacy through its academic work through Europe and the US. The academic relationship gives a lot of legitimacy to them, it has a symbolism which is very important."

· April 2002 Call for withdrawal of European funding from Israeli universities in a letter to the Guardian signed by 120 academics

· May 2002 Association of University Teachers backs call for moratorium on European funding of Israeli research

· June 2002 Mona Baker, an academic at Umist, sacks two Israeli academics from a small translation journal she edits

· May 2003 AUT conference rejects calls for an outright academic boycott of Israel

· October 2003 Oxford suspends Andrew Wilkie, the don who told an Israeli applicant for a PhD course: "I am sure you are perfectly nice at a personal level, but no way would I take on somebody who had served in the Israeli army."

· December 2004 School of Oriental and African Studies (Soas) holds conference on academic boycott. Launch of pro-boycott British Committee for Universities in Palestine and publication of a call for a boycott from a federation of Palestinian academics