Palestinian flags will start to be taken down from council buildings in Tower Hamlets.
Mayor of the London borough Lutfur Rahman said flags will be removed from council-owned infrastructure.
It comes after UK Lawyers for Israel threatened to pursue a legal case against Tower Hamlets unless it removed the flags.
However, Rahman denied they were "symbols of division" and claimed they had been used to "further the Islamophobic narrative."
Lutfur Rahman said the flags would be taken down
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Rahman said: "I understand that those who have erected these flags across the borough have done so in line with our strong tradition of solidarity and I reject that they are symbols of division.
"They are symbols of solidarity and sympathy for those enduring extreme suffering in Gaza. We must not forget that over 30,000 people have now been killed, 70 per cent of whom are women and children. The flags certainly had an impact and made residents’ views clear.
"Although these flags are an understandable expression of solidarity, I now feel they are being used to unfairly attack the people of the borough and further the Islamophobic narrative."
Tower Hamlets has the largest Muslim population of any local authority area in the UK at 39.9 per cent according to the 2021 census.
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A shop blind in Tower Hamlets
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Evening Standard reports that the lawyers wrote to the council to say that many Jewish residents were distressed by the large number of Palestinian flags being flown in the streets.
UK Lawyers for Israel claimed in January that many Jewish residents of Tower Hamlets were considering moving due what they described as a "hostile environment for Jews in the borough."
One mother in her early 50s, who wished not to give her real name, told MailOnline: "I am the mother of a boy who goes to primary school in the borough
"We have lived here for four years but we are leaving, even to go abroad, before he goes to secondary. This week, 11 flags hung outside his school. There is graffiti calling for a boycott on 'apartheid Israel' on a wall nearby."
Protests have been held in Tower Hamlets
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It comes after Tory MP Paul Scully was hit with backlash after saying that areas of Tower Hamlets had become "No-go zones."
Scully himself apologised for the remarks and said they had the potential to feed "conspiracy theories."
