The United States is Israel's most important ally, providing it with more than $3 billion per year in defense aid, but former president Barack Obama grew frustrated with Israeli settlement building in the occupied West Bank.
Trump, however, has signaled more accommodating policies toward Israel and has called for moving the U.S. Embassy to Jerusalem, a city claimed as the capital of both Israel and a potential future Palestinian state.
Within two days of Donald Trump taking office in the White House, the Israeli government has green-lit the construction of settlement homes in East Jerusalem - an act that defies the mandate set by the United Nations and other world powers.
Speaking from the White House briefing room Monday, Press Secretary Sean Spicer said there has been no decision on the embassy move.
Palestine Liberation Organisation Secretary General Saeb Erekat called for worldwide action against Israel's illegal expansion. During the call, Trump "affirmed his unprecedented commitment to Israel's security" and invited Netanyahu to an early February meeting at the White House.
Despite public commitments to move the US embassy to Israel during the presidential campaign, President Donald Trump has not decided on the move, the White House said Monday. Putting the USA embassy in Jerusalem could send a message that the US accepts Israel's claim to both halves of the city, rejecting the Palestinians' ambitions for an area that's overwhelmingly Palestinian in population.
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"He wants to grow closer to Israel to make sure it gets the full respect in the Middle East", he continued.
Egypt condemned on Tuesday Israeli government approval to build additional settlement homes in occupied Jerusalem.
"We build and continue to build", Netanyahu wrote on Twitter shortly after Lieberman's announcement on Tuesday. We no longer have our hands tied...
But while Israel would like to see the move, it would enrage many Arab leaders, including Palestinian officials, and many experts worry it could hurt any chances of reviving the peace process in the region. This includes the West Bank, East Jerusalem and the Golan Heights.
A senior Israeli source listed the settlements that have been approved for the immediate marketing of land.
"This is a significant expansion deep in the West Bank that does have the capacity to undermine the credibility of a two-state solution", the official told the ABC.