* Hollywood actress signs with Israeli soda-maker
* Activists condemn firm for factory in settlement
* Oxfam says her new role is "incompatible" with charity
By Noah Browning
JERUSALEM, Jan 30 (Reuters) - Actress Scarlett Johansson has quit her role as an ambassador for Oxfam, the charity said on Thursday, after she fell out with group for endorsing an Israeli firm operating in the occupied West Bank.
The Hollywood star has become the public face for soda-maker SodaStream and is due to appear in an advert for the company that is set to air during the Super Bowl on Sunday.
However, the multi-million dollar deal has caused a backlash amongst activists and humanitarian groups because SodaStream's largest factory is based in a Jewish settlement in the occupied West Bank.
The company employs both Palestinian and Israeli workers and says its plant offers a model of peaceful cooperation, but settlements are deemed illegal under international law and are condemned by Oxfam, which has a large operation in the region.
After consultations with Johansson earlier in the week, the actress informed the charity that she would end her relationship with them.
"Oxfam has accepted Scarlett Johansson's decision to step down," the group said in a statement. "Ms. Johansson's role promoting the company SodaStream is incompatible with her role as an Oxfam Global Ambassador."
"Oxfam believes that businesses, such as SodaStream, that operate in settlements further the ongoing poverty and denial of rights of the Palestinian communities that we work to support."
The controversy has come at a delicate time for U.S.-backed peace talks between Israel and the Palestinians. Israeli officials fear that if the talks fail, a nascent call for an economic boycott of Israel and its settlements might grow.
In a statement reported in the American media, Johansson's spokesman wrote that "she and Oxfam have a fundamental difference of opinion in regards to the boycott, divestment and sanctions movement".
That movement, sponsored mostly by pro-Palestinian intellectuals and bloggers, advocates for a blanket boycott of all Israeli goods and questions the state's legitimacy.
There is a different consensus among international rights groups like Oxfam, however, which discourages trade only with Israeli firms located on land in the occupied West Bank.
"The very existence of (Israeli settlements) amounts to a serious violation of international law," the New York-based Human Rights Watch said in a statement on Wednesday.
"It is impossible to ignore the Israeli system of unlawful discrimination, land confiscation, natural resource theft, and forced displacement of Palestinians in the occupied West Bank, where SodaStream is located," the rights group added.
Johansson was named as an Oxfam ambassador in 2007 and has taken part in a number of its global campaigns.