Donald Trump said he was casting aside the “failed strategies of the past” as he upended 70 years of US foreign policy and forged ahead with his controversial decision to recognise Jerusalem as the capital of Israel .
The US president's move was condemned by Saudi Arabia, which described it as "unjustified and irresponsible".
The announcement from the White House was met with celebrations by Israel and immediate fury from the Palestinians, who accused him of destroying any hope of a peace deal.
“We cannot solve our problems by making the same failed assumptions and repeating the same failed strategies of the past,” Mr Trump said. “It is time to officially recognise Jerusalem as the capital of Israel.”
Defying warnings from around leaders around the world, Mr Trump said he “judged this course of action to be in the best interest of the US and the pursuit of peace between Israel and the Palestinians”.
He announced that America would become the only country in the world to move its embassy from Tel Aviv to Jerusalem, making good on a campaign promise important to many evangelical Christian and right-wing Jewish voters.
The Palestinians insist there can be no peace deal unless they are able to have east Jerusalem as the capital of their own independent state and said Mr Trump’s unilateral move had disqualified the US as peace broker.
“These condemned and unacceptable measures are a deliberate undermining of all efforts exerted to achieve peace and represent a declaration of the United States’s withdrawal from undertaking the role it has played over the past decades in sponsoring the peace process,” said Mahmoud Abbas, the Palestinian president.
Hamas, the Islamist militant group which controls the Gaza strip, accused Mr Trump of “flagrant aggression” and called for Muslims across the Middle East to rise up against US interests.
US embassies across the Middle East have bolstered their security arrangements in anticipation of potentially violent protests.
The State Department issued an updated "Worldwide Caution" to US citizens abroad, advising travellers to "be alert to the possibility of political unrest, violence, demonstrations, and criminal activities."
Mr Trump's decision was hailed by Israel and Jerusalem’s mayor ordered the American flag to be beamed in lights against the walls of the Old City in celebration.
“This is a historic day,” said Benjamin Netanyahu, Israel’s prime minister. “We are profoundly grateful to the president for his courageous and just decision."
Mr Trump tried to placate Palestinian anger by saying his decision did not rule out the possibility of a two-state solution, where Jerusalem would be the capital of both Israel and an independent Palestinian state.
“We are not taking a position of any final status issues including the specific boundaries of Israeli sovereignty in Jerusalem or the resolution of contested issues,” Mr Trump said. “The US would support a two state solution if agreed to by both sides.”
He called “for calm, for moderation, and for the voices of tolerance to prevail”.
Mr Trump's speech left little solace for Palestinians as it did not firmly commit to the idea of an independent Palestine, nor make any mention of their major concerns like the construction of Israeli settlements in the occupied West Bank.
The status of Jerusalem is one of the most sensitive issues in the Israeli-Palestinian conflict, and Palestinian leaders insist there is no hope for a peace agreement unless they are able to set up their own capital in East Jerusalem. Israel claims the entire city as its "eternal and undivided capital".
Husam Zomlot, the Palestinians' chief delegate to Washington, said recognising Jerusalem as the capital of Israel was a "stab in the back".
Mr Trump says he is delivering where previous presidents have "failed".
With Mike Pence, the US vice president, standing by his side, Mr Trump reminded American voters that both Bill Clinton and George W Bush had promised to move the US embassy to Jerusalem but had reneged once in office. “They failed to deliver. Today, I am delivering,” he said.
Saudi Arabia slammed Mr's Trump's decision to recognise Jerusalem as Israel's capital, calling the move "irresponsible", state media reported citing the royal court.
"The kingdom expresses great regret over the US president's decision to recognise Jerusalem as the capital of Israel. The kingdom has already warned of the serious consequences of such an unjustified and irresponsible move," the royal court was quoted as saying.
Theresa May said the UK "disagrees" with Mr Trump's decision.
"We believe it is unhelpful in terms of prospects for peace in the region," she said. "The British Embassy to Israel is based in Tel Aviv and we have no plans to move it."
Justin Welby, the Archbishop of Canterbury, tweeted a letter from heads of churches in Jerusalem that warned his move would "yield hatred, conflict, violence and suffering:"
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