0636 GMT February 22, 2018
"These procedures do also help in the extremist organizations to wage a religious war that would harm the entire region, which is going through critical moments and would lead us into wars that will never end, which we have warned about and always urged to fight against," Palestinian President Mahmoud Abbas said in a televised address following the US announcement cnn.com reported.
Trump's move means the US can no longer play a role in the peace process, said Palestine Liberation Organization Secretary-General Saeb Erekat.
"President Trump just destroyed any possibility of a two-state (solution)," Erekat, who is also the Palestinian chief negotiator, said in a statement.
"President Trump tonight made the biggest mistake of his life," Erekat told CNN's Christiane Amanpour. "Instead of encouraging the parties to sit together, the parties to put all core issues including Beit-ul-Moqaddas (Jerusalem) on the table and negotiate in good faith, he dictates."
Israeli officials have worked to demolish a two-state solution, he said.
The Trump administration said the step was a "recognition of reality" that Beit-ul-Moqaddas (Jerusalem) has long been the seat of the Israeli government.
In announcing the move, Trump stressed that the decision would have no impact on the boundaries of future Israeli and Palestinian states as negotiated under a final status agreement.
Palestinian factions called for three "days of rage" in protest, and the US State Department has issued a travel warning for the West Bank and Beit-ul-Moqaddas (Jerusalem)'s Old City. The UN Security Council will discuss the development on Friday.
Israeli PM: Trump's recognition as a “beautiful gift”
"Beit-ul-Moqaddas (Beit-ul-Moqaddas (Jerusalem)) has been the capital of the Jewish people for 3,000 years," Netanyahu said. He praised Trump and called the move an "important step towards peace, for there is no peace that doesn't include Beit-ul-Moqaddas (Beit-ul-Moqaddas (Jerusalem)) as the capital of the State of Israel."
Netanyahu vowed there would be no change with regard to the city's many holy sites.
"Israel will always ensure freedom of worship for Jews, Christians and Muslims alike," he said.
Israeli President Reuven Rivlin hailed Trump's recognition as a “beautiful gift”.
"Beit-ul-Moqaddas (Jerusalem) is not, and never will be, an obstacle to peace for those who want peace," he said in a statement that quoted Psalm 122. "As it is written, 'Pray for the peace of Beit-ul-Moqaddas (Jerusalem), may all that love her prosper, may there be peace in her quarters and palaces.'"
Beit-ul-Moqaddas (Jerusalem) Mayor Nir Barkat told CNN that Trump's decision was "the right thing to do, and here in Beit-ul-Moqaddas (Jerusalem) and Israel we applaud the President."