"We generally think that a red line has been crossed and the obligation on the newspaper is to correct that," Daniel Taub, Israel's ambassador in London, told The Times of Israel in a telephone interview.
The cartoon by Gerald Scarfe was published Sunday, the same day the world marked International Holocaust Remembrance Day.
The cartoon depicted Israeli Prime Minister Binyamin Netanyahu building a wall with the blood and limbs of screaming Palestinian women and children.
Martin Ivens, the newspaper's incoming editor in chief, told The Jerusalem Post he intends to meet with Jewish leaders to repair damage caused by the cartoon.
"The last thing I or anyone connected with The Sunday Times would countenance would be insulting the memory of the Shoah or invoking the blood libel," he said.
Middle East envoy Tony Blair, a former British prime minister, met with Netanyahu Monday and said he deplored the caricature, a statement from the prime minister's office said.
Rupert Murdoch, whose News Corp. company owns the British newspaper, said via Twitter that the newspaper owes "a major apology for the grotesque, offensive cartoon," The Jerusalem Post said.