Hungary opened a new trade office in west Jerusalem on Tuesday, fulfilling a February pledge by Prime Minister Viktor Orban to Israel to do so in the disputed city.
The opening stops short of moving Hungary's Israel embassy to Jerusalem as US President Donald Trump has done, breaking with decades of international consensus, but was still welcomed by Prime Minister Binyamin Netanyahu.
Attending the ribbon-cutting in a city-centre office tower along with Hungarian Foreign Minister Peter Szijjarto, Netanyahu hailed the move.
"It's the first European diplomatic mission to open in Jerusalem in many decades," Netanyahu said.
He called it "important for trade, for diplomacy and for the move that Hungary is leading right now to change the attitude in Europe towards Jerusalem."
The Jerusalem office is to be a branch of the Hungarian embassy in Tel Aviv.
The European Union's collective position is that Jerusalem's status must be negotiated by Israel and the Palestinians as part of a future peace agreement.
The Palestinians see the Israeli-annexed eastern sector of the city as the capital of their future state.
Lithuanian Prime Minister Saulius Skvernelis said Tuesday he would consider moving Lithuania's embassy in Israel to Jerusalem should he win May's presidential elections.
Senior politicians in fellow EU states Czech Republic and Romania have said they are also considered moving their embassies to Jerusalem but no decisions have been announced.
Netanyahu frequently lashes out at what he calls the EU's "hypocritical and hostile attitude", referring to the bloc's criticism of Israel's treatment of the Palestinians.
Israel occupied east Jerusalem in the 1967 Six-Day War and later annexed it in a move never recognised by the international community.
Israel considers the entire city its capital. East Jerusalem is considered occupied Palestinian territory under international law.
Trump in December 2017 drew criticism worldwide when he recognised Jerusalem as Israel's capital.
His country's embassy moved to Jerusalem from Tel Aviv the following May.
Guatemala was the first country to follow in America's footsteps, and Brazil's far-right President Jair Bolsonaro, who took office on January 1, has said he wants to also move its embassy to Jerusalem.
Australia in December recognised west Jerusalem as Israel's capital, but said it would not shift its embassy from Tel Aviv until a peace settlement is signed.