Mr Lapid tweeted his thanks to Ms Truss for considering such a move after the meeting, but it sparked a firm response from the Palestinians.
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"It is extremely unfortunate that Prime Minister Liz Truss uses her first appearance at the UN to commit to potentially breaking international law by promising a 'review' of the location of the British embassy to Israel," tweeted Husam Zomlot, the Palestinian ambassador to the UK.
"Any embassy move would be a blatant violation of international law and the UK's historic responsibilities.
"It undermines the two-state solution and inflames an already volatile situation in Jerusalem, the rest of the occupied territories and among communities in the UK and worldwide.
"Such promise is immoral, illegal and irresponsible."
Jerusalem is home to the third-holiest site in Islam, and is also revered by Jews and Christians.
Palestinians claim the Israeli-annexed eastern part of the city as their own future capital as part of a two-state solution.
US President Joe Biden has renewed Washington's long-standing call for a two-state solution, but has not reversed Mr Trump's controversial decision to recognise Jerusalem as Israel's capital.