Donald Trump's Jerusalem move angered Palestinians, sparked protests in the Middle East, and raised concern that it could further destabilise the region.
The status of Jerusalem is the centre of Palestine's conflict with Isarel. The city is home to key religious sites sacred to Judaism, Islam and Christianity, especially in East Jerusalem.
The Palestinians wants to make East Jerusalem as the capital of a future state.
Mahmoud Abbas lashed out at the United States' decision to declare Jerusalem as Israel's capital and slashing the aid package to the Palestinians as "unconstructive" measures.
He said President Trump's move will only delay reaching a final agreement.
"The US Administration disqualified itself from being an honest broker, and should not be the sole mediator in the peace process," the Palestine president told news agency PTI in an e-mail interview.
A day before Prime Minister Narendra Modi's historic visit to Palestine, making him the first Indian Prime Minister to visit the country, President Abbas said India can play a key role in the Middle East peace process.
In a dig at Donald Trump's assertion regarding working out an ultimate deal during his tenure, the Palestinian President said that they "have not received any proposals", but only "sudden and illegal decision on Jerusalem".
"Concerning the so called ultimate deal, we have not received any proposals for a peace plan until the moment. We keep hearing of an ultimate deal that the US President is going to present to the sides, but no one has proposed anything, but instead, President Trump announced his sudden and illegal decision on Jerusalem," he said.