LONDON, Oct 8 (Reuters) - British foreign minister Ed Miliband said on Thursday its Consulate General building in East Jerusalem, ordered to close by Israel, would remain open as an independent and operational UK Mission, serving the Palestinian people.

Israel had ordered the British consulate in East Jerusalem to close on Thursday after London announced plans to impose sanctions on settlements in the West Bank.

Miliband said that having withdrawn a number of staff and families in recent weeks, it would now work to build up their presence again.

The deterioration in ties between the two allies had sparked speculation in Israel that Britain could respond to the closure by expelling Israeli diplomats in London.

"We will work in the coming months to build back up our presence, and we will not take reciprocal action while such discussions are underway and credible," Miliband said.

Britain's minister for the Middle East, Stephen Doughty, told Sky News that Britain was engaged in ongoing talks with the Israeli government, and that it deeply regretted Israel's actions in relation to its consulate.

"Our building remains open, our staff remain doing important work," Stephen Doughty told Sky News. "We retain a presence in Jerusalem ... and it is very important that that work is able to continue."

(Reporting by Kate Holton and Sam Tobin, Editing by Paul Sandle)