°®Âþµº

Pompeo said the US Consulate General, a separate office which formerly handles dealings with Palestinians, would be replaced by a new "Palestinian Affairs Unit" inside the Israeli embassy.

The Palestine Liberation Organisation (PLO) swiftly condemned the move, which could effectively leave the US as the only major power without a specific representative office to the Palestinians. The move follows the shuttering of the Palestinian mission in Washington last month.

Pompeo has denied that the decision represents a shift in relations with the Palestinian Authority.

"This decision is driven by our global efforts to improve the efficiency and effectiveness of our operations. It does not signal a change of US policy on Jerusalem, the West Bank, or the Gaza Strip," Pompeo said in a statement.

He said that the US "continues to take no position" on how any peace deal between the Israelis and Palestinians would take shape.

"The administration is strongly committed to achieving a lasting and comprehensive peace that offers a brighter future to Israel and the Palestinians," he said.

Analysts say the Trump administration is aiming to pressure the Palestinians into peace talks with Israel. President Donald Trump's son-in-law Jared Kushner has been in talks with the Israelis on a still-secret peace plan he has reportedly devised. It is believed the deal would favour Israel.

President Donald Trump provoked outrage across the world last December with the announcement that the US would recognise Jerusalem as Israel's capital.

The move broke with decades of US policy and clashed with Palestinian aspirations of an independent state with the holy city as its capital.

The US embassy was officially transferred on 14 May, sparking violent protests in Gaza, where about 60 Palestinian protestors were killed by Israeli soldiers.

In August, the United States cancelled more than $200 million in aid for the Palestinians in the Gaza Strip and West Bank, and two weeks later said it would cut $25 million in aid to hospitals primarily serving Palestinians in Jerusalem.

Several countries at the UN General Assembly last month pledged $118 million in aid to help plug the funding gap.

The Palestinian leadership on Thursday blasted Washington's decision on the Palestinian office in Jerusalem as "ideological."

PLO Secretary-General Saeb Erekat said the decision to "end the existence of the US Consulate" would "reward Israeli violations and crimes".

"The Trump Administration is part of the problem, not part of the solution," he added in a statement.