The agreement comes years after President Donald Trump recognised Jerusalem as Israel's capital during his first term and shifted the US embassy from Tel Aviv in 2017.

'Forever capital of the Jewish people': US signs agreement to build permanent embassy in Jerusalem

An official in Netanyahu's office said the prime minister recognised that construction of a new embassy will take years

After Trump denial, Netanyahu clarifies remarks on timeframe for US embassy in Jerusalem

The US president wanted avoid another flash point in the region as he attempts to revive the Israeli-Palestinian peace process

Palestinians happy as Trump delays moving US embassy to Jerusalem

Trump has promised to relocate the US embassy from Tel Aviv to Jerusalem - a city which both Israel and Palestine claim as their capital

Palestinian president warns peace prospect will suffer in US embassy move