Donald Trump on Thursday tweeted that the US should recognise Israel’s occupation of the Golan Heights, despite international law underpinned by UN resolutions.
The decision follows a lobbying campaign by Israeli Prime Minister Benjamin Netanyahu in recent days.
Israel seized the territory from Syria in the Middle East War of 1967 and later annexed it.
The US leader said the territory was of "critical strategic and security importance" to Israel and the Middle East.
Mr Trump's comments gained much support from Republicans, but less so from Democrats. Republican senators Ted Cruz and Marco Rubio, who previously ran against Mr Trump for the party's presidential nomination, both supported Israeli sovereignty over the Golan Heights.
WATCH: The Golan Heights explained:
The American Jewish Committee warmly received Mr Trump's comments, saying: “We welcome President Trump’s recognition of Israel’s sovereignty over the Golan Heights, which acknowledges the history of the region and the facts on the ground. The events in Syria have proven that the entire region is safer with Israel in control of this territory.”
Days before Mr Trump made the tweet about the contested territory, the US State Department described the area as "Israeli-controlled" rather than "Israeli-occupied" in the latest edition of its Global Human Rights Report.
For the second year, the report did not use the word "occupied" in sections relating to the West Bank and Gaza.
Officials at the State Department said it was not a policy change because the report focuses on human rights, not legal issues.
Many UN resolutions have declared Israel's occupation of Palestinian territories to be illegal.
UN Resolution 2334 adopted in 2016 stated that Israeli settlement activity was a breach of international law and had no legal validity.
Mike Pompeo, the US Secretary of State, was visiting Israel when Mr Trump posted his tweet.
Mr Pompeo became the first person in his position to go to Jerusalem's holiest places, including the Western Wall, in the company of an Israeli prime minister.
Mr Trump's announcement angered Palestinian officials, who accuse the US administration of bias in its approach to contested areas.
Saeb Erekat, a senior Palestine Liberation Organisation spokesman, said it would sow further instability.
Hanan Ashrawi, a member of the PLO’s executive committee, said that “complicity in Israeli crimes is criminal”.
US officials have in the past spent time at Jerusalem's Western Wall unaccompanied by Israeli officials, to avoid appearing as if they recognise Israel’s rule over the area.
“I think it’s symbolic that a senior American official go there with the Prime Minister of Israel," Mr Pompeo said in Jerusalem on Thursday. "It’s a place that’s important for many faiths."
Mr Netanyahu quickly recognised Mr Trump’s announcement.
“At a time when Iran seeks to use Syria as a platform to destroy Israel, President Trump boldly recognises Israeli sovereignty over the Golan Heights. Thank you President Trump,” he tweeted minutes after Mr Trump's post.
While Mr Pompeo did not directly mention the Golan Heights, the Israeli leader, who is fighting a general election campaign, used the visit as a platform for the decision.
Mr Pompeo was given Israeli intelligence briefings on efforts by Lebanese militia Hezbollah to establish positions in Syrian-controlled parts of the Golan from which to threaten Israel.
Bloomberg reported that in light of Mr Trump's announcement, a slew of Democrat politicians have confirmed that they would not attend the AIPAC, a conference organised America's pro-Israel lobby.
Since coming to office, Mr Trump has moved the US Israeli embassy from Tel Aviv to Jerusalem. The decision last year has prompted weekly Friday protests on the Gaza Strip.
Mr Trump also stopped funding the UN aid agency supporting Palestine.
This month the US State Department said it would merge its Palestinian mission with the Israeli embassy. It also closed Palestine's office in Washington.
Mr Trump will host Mr Netanyahu at the White House next Monday and Tuesday.