It's not just this, other policies he had were not popular with the New Labour element (which was essentially a lurch to the right, economically), which also helped to sow the discontent and dis-unity in the party during his election campaigns. The Israel thing is just the largest front they all attacked him on so it's an easy turn to be able to say "well we're denouncing genocide for one thing". I suspect a more thorough policy stance will be more forthcoming.

Sadly, I think the UK is too stuck atm, with it's FPTP and (basically) two party system to be able to get a significant dent in the number of Labour MPs, however a show of support for (what I imagine will be) more social leaning policies might help to drag Labour back to the left a bit.