During a speech in parliament, Lammy said that the decision comes following a review of export licenses for UK arms which found there was a "clear risk" that they would be used in a way that could breach international law.
"Facing a conflict such as this, it is this government's legal duty to review Britain's export licenses," said Lammy.
Around 30 of 350 licenses will be suspended, he noted, however adding: "This is not a blanket ban, this is not an arms embargo."
The British government has been under fire over continuing arms export licenses to Israel.
In June, the Department for Business and Trade said the UK has issued 108 arms export licenses to Israel since Oct. 7 – when the Gaza conflict began – while over 300 licenses were still active, according to the data prior to Monday's decision.
The 30 licenses include components for military aircraft, helicopters, drones, and items which facilitate ground targeting.
However, the Foreign Office said several export licenses that have been assessed are not for military use in the current Gaza conflict and "therefore do not require suspension."
He further told lawmakers that after raising his concerns while in opposition, he immediately launched a review upon taking office and "committed to sharing the review's conclusions."
"We have rigorously followed every stage of the process which the previous Conservative government established, and let me first be clear on the review's scope, this government is not an international court," he said.
Lammy added: "It is with regret that I inform the House today, that the assessment I have received finds that for certain UK arms exports to Israel, there exists a clear risk that they might be used to commit or facilitate a serious violation of International Humanitarian Law.
"Therefore today we are announcing the suspension of around 30 export licenses to Israel as required under the Export Controls frameworks."
Later, the Foreign Office issued a statement confirming that the British government has decided to suspend arms export licenses to Israel for use in military operations in Gaza following a review of Tel Aviv’s compliance with international humanitarian law.
"UK assessment concludes there is a clear risk certain military exports to Israel might be used in violations of International Humanitarian Law," it noted.
However, it stated that the suspension will not change the UK’s "steadfast support for Israel’s security," and that the decision will be kept under review.
"The government has concluded there is a clear risk that items exported to Israel under these 30 licences might be used in serious violations of IHL and is therefore suspending certain exports immediately from today."
