A Scottish student has been found guilty of a racist breach of the peace after he "insulted" an Israeli flag and called a Jewish student a terrorist, in a landmark case that has been described as "profoundly ignorant" by some campaigners.

Paul Donnachie, an 18-year-old studying at St Andrews University, was found guilty by a Scottish court on Tuesday, following a complaint by a Jewish-American student at the campus.

Chanan Reitblat said his privacy had been invaded when Donnachie and fellow student Samuel Colchester entered his room, rubbed his hand first on his genitals and then on an Israeli flag.

"Paul put his hands down his pants, pulled off a pubic hair and rubbed it over my flag. Sam did the same thing," Reitblat said.

Donnachie also told him Israel was a terrorist state and the flag was a terrorist symbol.

After finding Donnachie guilty, Sheriff Charlie Macnair said the student had racial motivations for his actions.

"I consider your behaviour did evince malice towards Mr Reitblat because of his presumed membership of Israel. I'm satisfied you said Israel was a terrorist state and the flag was a terrorist symbol and I also hold that you said that Mr Reitblat was a terrorist," Macnair told the court.

The decision was a landmark ruling as the judge decided that attacking someone's Jewish identity based on their identification with Israel was racist.

Donnachie has defended his actions as "not malicious" and intends to appeal his conviction.

"I'm not contending that my action toward the flag was commendable or dignified, but it was a political expression,” he said during his testimony.

Following the verdict he said: "This is a ridiculous conviction. I'm a member of anti-racism campaigns, and I am devastated that as someone who has fought against racism I have been tarnished in this way."

The Scottish Palestine Solidarity Campaign (SPSC) said Tuesday's judgement was one of "profound ignorance" and attacked the prosecution for attempting to "conflate legitimate political criticism of the State of Israel with racism."

Upon hearing the verdict members of the SPSC are reported to have shouted "scandal" from the public gallery.

Reitblat was studying for one term at St Andrews University as part of his university degree at Yeshiva University in New York.

He had fled as a child with his family to the US in an attempt to escape the then-severe Jewish oppression in communist Lithuania.

Donnachie has been expelled from St Andrews. The case against the second student, Colchester, was found not proven but he has been suspended from the university for his part in the incident.