Mr Bell will work on the paper until April 2024.
A political cartoonist who worked for The Guardian for over 40 years, claimed that he was sacked for drawing a cartoon of Israeli Prime Minister Benjamin Netanyahu as the organisation thought it was 'anti-Semitic', The Telegraph reported.
The cartoon by Steve Bell depicted Benjamin Netanyahu wearing boxing gloves and holding a scalpel over a map showing the Gaza Strip. The cartoon carried a quote reading, "Residents of Gaza, get out now.'' This was in reference to Israel urging residents to evacuate the northern Gaza Strip before an expected ground offensive against Hamas.
Critics said its imagery was similar to Shylock, the antagonistic Jewish moneylender from Shakespeare's The Merchant of Venice who insists on the "pound of flesh" he is owed.
Mr Bell, who worked for the newspaper for 42 years said that the decision was ''a bit of a shock.'' He said that he filed the cartoon on Monday morning and four hours later, it was rejected by senior editors, Evening Standard reported.
A Guardian spokesman said: ''The decision has been made not to renew Steve Bell's contract. Steve Bell's cartoons have been an important part of the Guardian over the past 40 years – we thank him and wish him all the best.''
However, Mr Bell defended the image saying it was a reference to a 1960s cartoon of then-US President Lyndon B. Johnson with a scar on his torso shaped like the map of Vietnam. He further asserted that it was ''impossible to draw this subject for The Guardian now without being falsely accused of using ‘anti-Semitic tropes''.
''The Guardian has every right not to publish my cartoon if it so chooses, but it should not do so using entirely contrived and false reasons. All that does is inhibit discussion of a dreadful but important subject,'' he added.
Mr Bell will work on the paper until April 2024.
The Hamas group gunned down, stabbed, and burned more than 1,300 people in the attack that Israel has compared to 9/11 in the US, sparking a massive retaliatory bombing campaign targeting the group that has killed over 2,200 in Gaza. Some 1.1 million people live in the north of Gaza, and aid agencies have said forcing them to move is an impossibility as the war rages, and as supplies of food, fuel, and medicines run low.