In a move condemned by most of the world, Donald Trump has announced the U.S. will recognise Jerusalem as the capital of Israel.

The approach of a deadline this week for Trump to sign a waiver that would have assured the embassy remain in Tel Aviv for at least another six months fueled rising tension over his potential shift in policy.

Trump "is prepared to support a two State solution".

"We want an agreement that is a great deal for the Israelis and a great deal for the Palestinians".

The IDF is on high alert after Hamas called for a "day of rage" ahead of the White House's expected announcement to recognize Jerusalem as Israel's capital.

Israel deems Jerusalem its eternal and indivisible capital dating to antiquity, and its status is one of the thorniest barriers to an elusive Israeli-Palestinian peace.

Mahmud Abbas's Palestine Liberation Organization said Trump has destroyed the two-state solution, warning the United States could no longer hope to be a peace broker, while Hamas - the Palestinian Islamist movement that runs the Gaza Strip - said Trump's decision opens "the gates of hell on U.S. interests in the region".

In 1995, Congress passed a law requiring the American embassy to be relocated to Jerusalem.

An inbuilt waiver has been repeatedly invoked by successive USA presidents, postponing the move on grounds of "national security" once every six months, meaning the law has never taken effect.

Presidents Bill Clinton, George W. Bush and Barack Obama re-ratified the clause every six months.

But Trump appears set on fulfilling his campaign promise, regardless of the regional consequences.

"The recognition by the US and other countries will make clear to Palestinians that they must accept the existence of Israel and must conduct real negotiations of peace with Israel", said Intelligence Minister Israel Katz.

Trump was pushed to act on the embassy as a result of a 1995 law, which stated that the city "should be recognized as the capital of the state of Israel" and the USA embassy be moved there.

Also Wednesday, Iran's supreme leader, Ayatollah Ali Khamenei, slammed the decision on Twitter, saying it was taken "out of despair and debility".

"I have determined that it is time to officially recognise Jerusalem as the capital of Israel", Trump said from the White House.

Israeli Prime Minister Benjamin Netanyahu delivers a speech on December 6, 2017, during a diplomatic conference organized by daily Israeli newspaper Jerusalem Post, in Jerusalem.

Jordan's King Abdullah II warned the Trump administration that an embassy move could derail Israeli-Palestinian peace efforts ― an issue Trump has delegated to Jared Kushner, his son-in-law and adviser.

The move would shift decades of USA policy, going against an global consensus that the status of the city should be decided in a peace agreement between Israelis and Palestinians.

The Council of the League of Arab States released a statement calling the recognition of Jerusalem as Israel's capital an act of "open aggression" against "the rights of the Palestinian people and all Muslims and Christians". His move "will yield increased hatred, conflict, violence and suffering in Jerusalem and the Holy Land, moving us farther from the goal of unity and deeper toward destructive division", they said.

The U.S. Consulate General in Jerusalem tweeted on Tuesday that U.S. citizens should avoid areas where crowds have gathered to demonstrate.

The Palestinian movement Hamas - said Trump's decision opens "the gates of hell on U.S. interests in the region".

The Trump administration has made several changes in policy in an attempt to cast itself as pro-Israel, including pulling out of UNESCO, the United Nations cultural and education agency, after accusing it of anti-Israel bias.

Israel, by contrast, applauded Trump's move.

It's unclear where in Jerusalem the embassy would be, however, which could present a possible obstacle to implementing Trump's plan.