President Donald Trump is likely to announce next week that the United States recognises Jerusalem as Israel's capital, a move that would upend decades of American policy and inflame tensions in the Middle East.
A senior official said President Trump could make the controversial declaration in a speech on Wednesday though he is also expected to again delay his campaign promise to move the American embassy to Jerusalem from Tel Aviv. The senior official and two other government sources said final decisions had not yet been made.
The Palestinians want Jerusalem as the capital of their future state, and the international community does not recognise Israel's claim on all of the city, which is home to sites holy to the Jewish, Muslim and Christian religions. Recognition of Jerusalem as the capital of Israel would deviate from previous US presidents who have insisted that the status of Jerusalem' must be decided in negotiations.
Word of the president's planned announcement drew criticism from the Palestinian Authority and is sure to anger the broader Arab world.
It could also unravel the US administration's fledgling diplomatic effort, led by Mr Trump's son-in-law and senior adviser Jared Kushner, to restart long-stalled Israeli-Palestinian peace talks and enlist the support of Arab allies.
Nabil Abu Rdainah, spokesman for Palestinian president Mahmoud Abbas, said US recognition of Jerusalem as Israel's capital would "destroy the peace process" and "destabilise the region".
Such a move, however, could help satisfy the pro-Israel, right-wing base that helped Mr Trump win the presidency and also please the Israeli government, a close US ally. The senior US official, speaking on condition of anonymity, said details were still being finalised and could change.
Another US official said Mr Trump appeared to be heading toward recognising Israel's claim to Jerusalem but that it was not a done deal. The White House National Security Council said there was "nothing to announce".
Mr Trump's impending decisions on Jerusalem, one of the most sensitive core issues of the Israeli-Palestinian conflict, follow intense internal deliberations in which the president has personally weighed in, one White House aide said. Officials say Mr Trump is likely to continue his predecessors' practice of signing a six-month waiver overriding a 1995 law requiring that the US embassy be moved from Tel Aviv to Jerusalem.
Another option under consideration is for Mr Trump to order his aides to develop a longer-term plan for the embassy's relocation to make clear his intent to do so eventually, the officials said. It was unclear, however, whether any public recognition by Mr Trump of Israel's claim on Jerusalem would be formally enshrined in a presidential action or be more of a symbolic statement.
President Trump pledged on the presidential campaign trail last year that he would move the embassy from Tel Aviv to Jerusalem. But in June, he held back, saying he wanted to "maximise the chances" for a new US-led push for what he has called the "ultimate deal" of Israeli-Palestinian peace. Those efforts have made little, if any, progress so far and many experts are sceptical of the prospects for success.
The status of Jerusalem is one of the major stumbling blocks in achieving peace between Israel and the Palestinians. Israel captured Arab East Jerusalem during the 1967 Middle East war and later annexed it, a move that is not recognised internationally.
Arab governments and western allies have long urged Mr Trump not to proceed with the embassy relocation, which would reverse long-standing US policy by granting de facto US recognition of Israel’s claim to all of Jerusalem as its capital.
Visiting Washington last week, King Abdullah of Jordan warned that moving the US embassy could be "exploited by terrorists to stoke anger, frustration and desperation".
Some of Mr Trump's top aides have privately pushed for him to keep his campaign promise to satisfy a range of supporters, including evangelical Christians, while others have warned of the potential damage to US relations with Muslim countries.