Hugh Lanning, head of the London-based Palestine Solidarity Campaign (PSC), was denied entry on Sunday night at Ben Gurion airport in Tel Aviv over his "ongoing actions to promote boycotts against Israel", the immigration authority said.
He flew back to London on Monday morning, authority spokeswoman Sabin Hadad said.
"The organisation Mr Lanning heads is one of the leading anti-Israel delegitimization and BDS (Boycott, Divestment and Sanctions) organisations in Britain, and one of the largest in Europe," a joint statement from the immigration authority and the strategic affairs ministry said.
It also accused Lanning of maintaining ties to leaders of Hamas, the Palestinian Islamist group that runs the Gaza Strip.
The PSC condemned what it called an "undemocratic" decision and called on the British government to intervene.
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"The PSC will not stop raising its voice to highlight the systematic violation of Palestinian human rights in Gaza, the West Bank, and Israel itself," its director Ben Jamal said in a statement.
Israel has carried out a campaign against calls to boycott the Jewish state over its 50-year occupation of Palestinian territory.
It sees the boycott movement as a strategic threat and accuses it of anti-Semitism -- a claim activists deny, saying they only want to see the occupation end.
Last week, parliament adopted a law barring entry to foreigners who support boycotting Israel, a move denounced by human rights groups and the opposition as "thought control" harmful to the country's international standing.
"If Israel believes that by introducing these draconian undemocratic laws it will intimidate its critics into silence, it is mistaken," Jamal said.
Lanning was however not stopped due to the new law but instead on the discretion of Interior Minister Aryeh Deri and Strategic Affairs Minister Gilad Erdan, who can bar those they see as working to harm Israel, Hadad said.
Israeli politicians have become more combative against BDS activists under Prime Minister Benjamin Netanyahu's current coalition government, seen as the most right-wing in the country's history.