Fifa’s disciplinary committee will investigate alleged breaches of its rules by the Israel Football Association (IFA).
The Palestinian Football Association (PFA) submitted a proposal to have Israel suspended from international football in May over the war in Gaza.
“The Fifa Disciplinary Committee will be mandated to initiate an investigation into the alleged offence of discrimination raised by the Palestine Football Association,” Fifa said.
The PFA believes Israel’s federation has committed “violations of Fifa regulations” and called for sanctions against the country’s national teams and clubs.
Fifa president Gianni Infantino said: “The Fifa Council has implemented due diligence on this very sensitive matter and, based on a thorough assessment, we have followed the advice of the independent experts.
“The ongoing violence in the region confirms that, above all considerations, and as stated at the 74th Fifa Congress, we need peace. As we remain extremely shocked by what is happening, and our thoughts are with those who are suffering, we urge all parties to restore peace to the region with immediate effect.”
Two investigations have been mandated by the Fifa Council into the IFA, with the first into allegations of discrimination within its national league, to be conducted by Fifa’s disciplinary committee.
The governing body said that the second, led by the Fifa Governance, Audit and Compliance Committee, will consider “the participation in Israeli competitions of Israeli football teams allegedly based in the territory of Palestine”.
Israel are playing their Nations League home matches in Hungary, where an away game against Belgium last month was also moved because of security concerns.
They are scheduled to host France and play in Italy during the international break in October.
Israel launched a military campaign in Gaza in response to the unprecedented attack on southern Israel on 7 October by Hamas gunmen, during which about 1,200 people were killed and 251 taken hostage.
Since the attack, a military campaign in Gaza has killed a total of 41,689 people, according to the Hamas-run health ministry.
The Fifa Council met on Thursday with Israel launching a ground invasion in southern Lebanon against the armed group Hezbollah, while Iran has fired more than 180 missiles towards Israel.
Shino Moshe Zuares, the president of the IFA, previously said: “We are facing a cynical political and hostile attempt by the Palestinian association to harm Israeli football.