Israel has warned Brazil it will downgrade relations unless it accepts a former head of the Jewish settlement movement as its ambassador in Brasilia, BBC News reports.

Argentina-born Dani Dayan was appointed four months ago but his nomination has not yet been approved by Brazil.

On Sunday, December 27 Israel's deputy foreign minister said Israel would leave diplomatic relations "at the secondary level" if Dayan was not confirmed.

Brazil has not yet responded to the deputy foreign minister's remarks.

Dayan was the chairman of the Yesha Council, an umbrella group representing Jewish settlers in the occupied territories, from 2007 to 2013.

The fate of Jewish settlements in the West Bank and East Jerusalem - land claimed by Palestinians for a future state - is one of the most contentious issues between Israel and the Palestinians. The settlements are considered illegal under international law, though Israel disputes this.

Israeli Deputy Foreign Minister Tzipi Hotovely told Israel's Channel 10 that Dayan would not be replaced as Israel's nominee.

Hotovely spoke after Dayan warned that if the government did not act in his case, it could create a precedent barring settlers from representing Israel abroad.

But Reuters news agency quoted an unnamed Brazilian Foreign Ministry official as saying that Brazil would not cave in to pressure.