The Scottish Government has flown the Palestinian flag outside its buildings after the First Minister announced funding to arms companies that sell weapons to Israel had been paused.

The Government has been criticised in recent months for continuing to fund companies in Scotland who provide weapons parts to Israel.

The funding, according to ministers, is usually provided for apprenticeships with arms firms.

MSPs also voted 65 to 24 – with 26 abstentions – to back the recognition of a state of Palestine in a symbolic motion at Holyrood.

Speaking on Wednesday as the Palestinian flag flew over Scottish Government buildings in Edinburgh, First Minister John Swinney urged the UK Government to recognise the state of Palestine and withdraw from the trade deal with Israel, telling MSPs there is a “prima facie case of genocide in Gaza”.

He said: “Previously, we have provided business grants and investment support to companies involved in the design, production, supply and support for military equipment, technologies and services.

“We do so because we recognise that defending our country, defending our continent, is a duty of Government – anyone watching the war in Ukraine would, I hope, recognise the reality of the importance of defence.”

But he added: “In recognition of that changed international landscape, the Scottish Government will lift the restriction that we have applied on the use of support for the production of munitions, but in the face of genocide, there can be no business as usual.

“We will pause new awards of public money to arms companies whose products or services are provided to countries where there is plausible evidence of genocide being committed by that country – that will include Israel.”

The pause will cover the Scottish Government itself, the Scottish National Investment Bank and the nation’s enterprise agencies, the First Minister said.

Money already pledged for apprenticeships will be honoured.

Along with the shift on funding for arms companies, the First Minister said 20 children injured in the crisis will be brought to Scotland for medical treatment, while £400,000 will be spent on the creation of a rapidly deployable hospital for use in Gaza.

The First Minister said it is “time for the United Kingdom to withdraw from the UK-Israel free trade agreement in view of Israel’s behaviour”, and the UK Government should follow Ireland’s lead in prohibiting goods made in the occupied West Bank.

Following the announcement, Scottish Government delivery bodies such as Scottish Enterprise will not provide support for trade between Scotland and Israel.

“We are witnessing a humanitarian disaster of historic proportions and yet the bombs continue to fall,” the First Minister said.

“The world cannot wait for a final court ruling before acting.

“The signs are clear, the alarm has been raised, the bombs and rockets must stop and humanitarian aid must flow.”

He added: “Acknowledging that we are witnessing the signs of genocide brings with it a responsibility to act – the people of Scotland expect no less of us.”

Scottish Conservative leader Russell Findlay described the situation in the Middle East as a “blight on humanity”, but added he believes “this Parliament should focus the powers it has to improve people’s lives here in Scotland”.