Israeli Prime Minister Benjamin Netanyahu said on Tuesday that a US peace plan envisages the proposed Palestinian capital be located in Abu Dis, a neighbourhood on the outskirts of Jerusalem.
After US President Donald Trump presented his peace plan, Mr Netanyahu told reporters the United States recognises Jerusalem as Israel's undivided capital, "by which I mean, within its fences," an apparent reference to municipal boundaries.
The right-wing leader, who faces a new election in March, said he would bring a proposal for applying Israeli jurisdiction to the Jordan Valley, the northern Dead Sea and West Bank settlements for Cabinet approval at its next session, probably on Sunday.
"Israel is offering the Palestinians, at the end of the process, conditional, limited sovereignty," Netanyahu said.
Palestinians were absent from Trump's announcement and Palestinian President Mahmoud Abbas called the plan the "slap of the century."
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