In its statement, the Prime Minister's Office said that "Israel's solid stance on the matter is that the American embassy, like all other embassies, should be located in Jerusalem, Israel's eternal capital".
The two-state solution advocated by successive USA administrations and most European Union member states envisages East Jerusalem as the capital of a Palestinian state.
U.S. President Donald Trump has signed an order delaying the relocation of the U.S. Embassy in Israel from Tel Aviv to Jerusalem, breaking his election promise, several reports said, according White House statement.
The White House also said that President Trump made the decision to "maximise the chances of successfully negotiating a deal between Israel and the Palestinians".
During the 2016 presidential campaign, Trump vowed he would expedite the move.
So why's moving an embassy such a contentious idea?
However, while admitting dismay with Trump's decision, most of its critics said that they still had hope the president would make the move in the future. But Trump has apparently realized that the Israeli-Palestinian conflict, much like the USA health care system, is complicated.
The latest move by Trump breaks one of his campaign pledges to move the embassy to Jerusalem.
INSKEEP: Oh, and that's the part of Jerusalem that Israelis captured in a war in 1967.
Momani, who is also the government's spokesperson, said the Kingdom commends the USA president's decision to seek a peace agreement that ends the Palestinian-Israeli conflict and contributes to achieving peace and stability in the region. The Israeli government supports relocating the embassy. The longstanding USA position is that Jerusalem's fate must be worked out through Israeli-Palestinian negotiations. Everybody recognises Jerusalem as the capital of Israel.
Haaretz reported that Netanyahu had asked Trump not to sign the waiver during Trump's recent visit to the Holy Land.
In the 1940s, the United Nations proposed the worldwide community oversee Jerusalem since the city is so important to three major religions. The United Nations' original partition plan from 1947 on Palestine called for Jerusalem - with religious sites revered by Jews, Christians and Muslims - to be a city governed by an global body.
"We are ready to start the consultation process with the U.S. administration".
They hope to make East Jerusalem the capital of their future state, and have broad support from the global community.