Social Democrats leader Holly Cairns has accused the Government of "slow walking" the Occupied Territories Bill and criticised the possible exclusion of services from the law.
The Government has said it is working on an Occupied Territories Bill which would limit trade with illegal Israeli settlements, but activists and opposition figures have raised concerns that it would only include goods and not services.
Taoiseach Micheál Martin has said the amount of services imported from the Occupied Palestinian Territories "is not huge".
During Leaders' Questions, Ms Cairns welcomed "the release of hostages on both sides" but said: "Even in this fragile piece, Palestinians continue to be dehumanised."
She said many of the Palestinians released by Israel were never charged or convicted of any crime but were still referred to as prisoners.
"We hope with all our hearts that this genocide is over, but we also have to face reality.
"Five Gazans were murdered by Israeli forces yesterday morning, just two days after committing to a ceasefire.
"The simple fact of the matter is that the crimes and barbarity of the Israeli government predate 7 October, and in all likelihood, will not come to an end with this peace deal.
"For decades, Palestinians have suffered under an apartheid regime and brutal occupation in the West Bank, where Hamas does not have a presence."
Ms Cairns said this why Ireland has "a duty under international law to end all trade with illegal Israeli settlements".
She said a "huge component of trade between Ireland and the illegal settlements will continue" if the Bill is enacted without the inclusion of services.
In response, Mr Martin said the quantity of services imported from Occupied Territories Bill was unknown but "not huge".
"Goods can be traced fairly easily through documentation, certificates of origin - services are a much different kettle of fish," he said.
No decision made in relation to services - Taoiseach
Mr Martin added: "No decision has been made in relation to services."
He said there are issues around determining the "clear territorial link" on financial consulting, software development, and digital services.
Mr Martin said the most significant issue facing Gaza was the unhindered delivery of aid.
"We earnestly hope that peace will sustain in Gaza, and it’s extremely important that every effort is made to get huge volumes of humanitarian aid into Gaza."
He said the release of the hostages is "a big moment" that should be acknowledged.
"They should never been taken as hostages in the first instance.
"Many were attending a music festival, and there should be no equivocation about that.
"And likewise, illegally detaining Palestinians without any trial, without any evidence base, is also wrong and shouldn’t be condoned."
Black 'extremely' concerned over possible exclusion of services
Earlier, Senator Frances Black said she is "extremely concerned that Government may walk back on its commitments on the Occupied Territories Bill and exclude services from the final legislation".
"This would significantly undermine both the intent and impact of the Bill," she said.
"Leadership now means including services. That is where the money is."
Ms Black said Irish people are frustrated in waiting on action for this.
Speaking on RTÉ's Drivetime, Fianna Fáil TD Shay Brennan said that Mr Martin has practical concerns about the Occupied Territories Bill.
Mr Brennan said he did not see waiting for the Attorney General to bring his recommendations as a delay.
He said that there are potential challenges from a legal perspective, and potential difficulties tracking services especially digitally from a customs perspective, adding that this is not a simple piece of work.
He said that there will be technical difficulties with the implementation..
He said it is important the Attorney General takes the time and diligence to go through it the Bill.
