US President Donald Trump will recognise Jerusalem as Israel’s capital, senior administration officials have said.
But the officials said Mr Trump would not immediately move the US embassy from Tel Aviv to Jerusalem.
The news comes ahead of an expected speech by Mr Trump on Wednesday.
Arab leaders earlier warned against moving the US embassy in Israel to Jerusalem, with one saying this would be “a flagrant provocation to Muslims”.
The status of Jerusalem – a holy site for Israelis and Palestinians – is extremely contentious.
Israel has always regarded Jerusalem as its capital city, while the Palestinians claim East Jerusalem as the capital of a future Palestinian state.
In recognising Jerusalem as Israel’s capital, the US becomes the first country to do so since the foundation of the state in 1948.
What is so contentious about Jerusalem’s status?
The issue goes to the heart of Israel’s conflict with the Palestinians, who are backed by the rest of the Arab and wider Islamic world.
The city is home to key religious sites sacred to Judaism, Islam and Christianity, especially in East Jerusalem.