* Johansson link to Israeli soda maker causes global ripple
* Activists condemn firm for factory in settlement
* Oxfam says her new role is "incompatible" with charity (Updates with WJC, activist, PR consultant, SodaStream comments)
By Noah Browning and Michael Roddy
JERUSALEM/LONDON, Jan 30 (Reuters) - Actress Scarlett Johansson's very public rift with the charity Oxfam over her endorsement of an Israeli firm operating in the West Bank has thrown a Hollywood spotlight on one of the thorniest issues in Middle East peace talks.
Johansson announced on Thursday she had quit her role as an ambassador for Oxfam, shortly before the airing during Sunday's Super Bowl of an advert in which she fronts for the Israeli soda maker SodaStream.
The multi-million-dollar sponsorship deal has caused a backlash among activists and humanitarian groups because SodaStream's largest factory stands in a Jewish settlement in the West Bank, which Oxfam said was "incompatible" with Johansson's role.
The dispute has won praise for Johansson from the World Jewish Congress (WJC), sharp criticism from a Palestinian group advocating a boycott of all Israeli goods - and a big dose of publicity for the company SodaStream.
"In a sense, I think everybody in some way has got some attention out of this," Mark Borkowski, a London-based public relations specialist and author, told Reuters.
SodaStream employs Palestinian and Israeli workers and says its plant offers a model of peaceful cooperation. But Jewish settlements are deemed illegal under international law and are condemned by Oxfam, which has a large operation in the region.
After consultations this week with Oxfam, whose ambassador she has been since 2007, Johansson informed the charity that she would end the relationship.
"DENIAL OF RIGHTS"
Announcing its acceptance of her decision, the charity said: "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."
Yonah Lloyd, SodaStream's chief communications officer, said the company did not court controversy and hoped that potential customers would look beyond it to the firm's product.
"We don't invite this publicity, but we certainly hope at the end of the day it will generate lots of thought on the beautiful thing we are doing for our employees."
The WJC applauded Johansson for "her forthright defense of economic cooperation between Israelis and Palestinians and for standing up to the international bullies" and criticised Oxfam.
"By ending its association with Miss Johansson ... Oxfam has chosen to align itself with the unprincipled and anti-Semitic BDS movement," WJC CEO Robert Singer said in a statement, referring to groups urging boycotts, disinvestment and sanctions against Israel and Israeli goods.
"This was a cowardly act that Oxfam should realize is a reprehensible and damaging mistake," Singer added.
In contrast, Omar Barghouti, co-founder of the Palestinian Campaign for the Academic and Cultural Boycott of Israel, claimed a win for his campaign, saying the company and actress had both been weakened by the dispute.
"(SodaStream) was exposed to the whole world as an occupation profiteer. Prior to this, most SodaStream customers had no idea that it is involved in grave violations of human rights," he told Reuters, adding that "Johansson's reputation as a defender of human rights has suffered irreparably".
The spat 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 U.S. media, Johansson's spokesman wrote: "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, campaigns for a blanket boycott of all Israeli goods and questions the Jewish state's legitimacy.
International rights groups including Oxfam seek to discourage trade only with Israeli firms located on land in the occupied West Bank.
"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 New York-based Human Rights Watch said in a statement on Wednesday.
(Editing by Gareth Jones)