Deputy Foreign Minister Ze'ev Elkin admitted on Wednesday that the Foreign Ministry was caught off guard over the new EU directives banning cooperation beyond the Green Line.
In an interview with Army Radio Elkin said the blame rests on his shoulders.
"The important question we must ask ourselves is how did we not know [about the new guidelines] while they were being formulated, this document wasn't written in a day," he said.
Reactions from across the political spectrum continued pouring in on Wednesday, after the European Union decided not to include the West Bank in agreements with Israel.
Civil Defense Minister Gilad Erdan said the EU directive was a blow to efforts to return to peace talks.
In an interview with Israel Radio, Erdan said the EU decision provides the Palestinians with incentive not to come to the negotiating table with Israel.
Erdan added that the possible determining factor behind the guideline could be the will to please the growing Muslim minority in Europe from a political standpoint.
Justice Minister Tzipi Livni expressed concerned that the new guidelines "could be the first step to Israel's isolation from the world."
Speaking to Army Radio, Livni, who is the Israeli peace negotiator, said this move should be a wake up call for Israel.
"There's a slippery slope here - the EU decision could affect the bilateral contracts European countries have with Israel," she warned.
Likud minister Israel Katz, meanwhile, called for the annexation of east Jerusalem and other settlement blocs as a response to the EU move.
"If we can't delay this decision we need to act; take areas in the Israeli consensus like greater Jerusalem, Gush Etzion, Ma'aleh Adumim, Givat Ze'ev, Betar Illit etc., annex them into Israel and apply Israeli law on them," he said on Channel 2's morning show.
"If the EU wants to push us to a corner, we'll show them we too have courses of action," he added.
The new European Commission guidelines, published on June 30, determined that Israeli governmental and non-governmental entities over the pre-1967 lines were not eligible for EU grants, prizes or funding. The guidelines followed a December 10 decision by the EU Foreign Affairs Council, which said that all agreements between the State of Israel and the EU were not applicable over the pre-1967 lines.
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