JERUSALEM — Israeli Prime Minister Benjamin Netanyahu on Tuesday hailed a US announcement that it no longer considers settlements in the West Bank and annexed east Jerusalem illegal, but the Palestinians pledged new measures to oppose it.

Netanyahu visited the Gush Etzion settlement bloc south of Jerusalem, where he told settler leaders he was "very moved" by the announcement made by US Secretary of State Mike Pompeo on Monday.

"Here we are on a historic day with another tremendous achievement for the State of Israel, which we have greatly worked for," he told them, according to a statement released by his spokesman.

"The Trump administration has corrected an historic injustice and lined up with truth and justice."

Pompeo said that after legal consultation Washington had concluded the establishment of settlements was "not, per se, inconsistent with international law".

He said that the United States was not necessarily considering the settlements legal either, but instead would defer to the judgement of Israeli courts. The majority of settlers live in settlements the courts have judged legal.

The decision is the latest in a series of pro-Israeli moves by Donald Trump's administration, including recognizing the disputed city of Jerusalem as Israel's capital and recognizing Israeli sovereignty over the Golan Heights, seized from Syria in the Six-Day War of 1967.

It puts the United States at odds with virtually the whole of the rest of the international community and breaks with UN Security Council resolutions declaring the settlements to be illegal as they are built on occupied land.

More than 600,000 Israelis live in settlements in east Jerusalem and the West Bank, alongside more than three million Palestinians.

Reacting to the change in US policy and its impact on the legality of Israeli settlements in the West Bank and in annexed east Jerusalem, the UN said on Tuesday, insisting that the settlements breach international law.

UN rights office spokesman Rupert Colville said that "a change in the policy position of one state does not modify existing international law, nor its interpretation by the International Court of Justice and the Security Council."

The rights office will "continue to follow the longstanding position of the United Nations that the Israeli settlements are in breach of international law," Colville told reporters.

The Arab League criticized Pompeo's announcement, calling it an "extremely adverse development."

The only two Arab states to have signed peace treaties with Israel — Egypt and Jordan — also sharply criticized the US policy shift, with Jordanian Foreign Minister Ayman Safadi warning of its "dangerous consequences".

The European Union reiterated that it considers all settlement activity "illegal under international law."

The direct impact on the ground may be limited but analysts say it will further embolden the settlement movement and may fend off potential legal moves against Israel.

The Palestinian Authority — which considers the US biased and has rejected the Trump administration as a mediator if peace talks are ever revived — denounced the latest decision.

Chief negotiator Saeb Erekat said the Palestinians would take a series of measures to oppose it.

"We began deliberations in the UN to present a draft resolution in the Security Council," he said on Tuesday.

"We expect a (US) veto but we will do it. Let the United States veto international law.

"We are going to the (UN) General Assembly and we will ask... the International Criminal Court to open an official judicial investigation with Israeli officials concerning settlements."

The US change of policy was widely seen as an attempt to change the legal context for a series of suits and complaints against Israel.

The European Union's top court last week ruled that EU countries must identify products made in Israeli settlements on their labels.

The International Criminal Court is expected to take key decisions on two cases against Israel in the coming weeks, including on Israeli settlements.

Ofer Zalzberg, senior Middle East analyst with the International Crisis Group think tank, said the US was trying to weaken the legal pressure on its ally.

"The Trump administration is trying to unravel international consensus on this issue of the illegality of settlements," Zalzberg said.

"It adds to a deepening politicization of international law, making it appear to be malleable to political opinions."

Israeli settlers, who overwhelmingly form part of Netanyahu's right-wing constituency, said the US policy change paved the way for annexation of the settlements.

Avi Bell, senior fellow at the right-wing Kohelet Policy Forum in Israel, said the announcement would strengthen Israel in defending settlement construction.

"The illegality of settlements has always been stated as a fact based upon an international consensus. The breaking of that consensus is important," he said.

Erekat said it was only the latest move by the US to try and force the Palestinians to capitulate and give up their claims to an independent state.

"They wanted us on our knees and they used every trick — internally, externally, regionally — to put pressure on us. We stand tall and we will stand tall." — AFP