The British Committee for the Universities of Palestine, which supports the academic boycott of Israel and opposes its occupation of Palestinian territories, said Hawking had decided to observe the boycott and as a result had "declined his invitation."
"This is his independent decision to respect the boycott, based upon his knowledge of Palestine, and on the unanimous advice of his own academic contacts there," it said on its website. Britain's Cambridge University, where Hawking has worked since 1962, confirmed he had pulled out, but was not immediately able to say whether he had endorsed the statement on the BCUP website.
"Professor Hawking has decided for personal reasons that he will not be attending the conference in Israel in June," a spokesman said.
Conference chairman Israel Maimon slammed Hawking's decision.
"The academic boycott against Israel is in our view outrageous and improper, certainly for someone for whom the spirit of liberty lies at the basis of his human and academic mission," he said in a statement.
The June 18-20 conference will host diplomats, politicians and academics, and its speakers include former British prime minister Tony Blair, ex-US president Bill Clinton and American songstress Barbra Streisand.