Israel's parliament on Tuesday gave final approval to legislation aimed at making it more difficult for the government to hand the Palestinians parts of Jerusalem under any future peace deal.

The bill, approved by a 64 to 51 vote, is the latest blow to remaining hopes for a two-state solution to the Israeli-Palestinian conflict.

Palestinian president Mahmud Abbas's office said US President Donald Trump's recent declaration of Jerusalem as Israel's capital and the new Israeli law amounted to a "declaration of war".

Formulated by Shuli Moalem-Refaeli of the far-right Jewish Home party, the new law comes weeks after Trump's decision on Jerusalem sparked deadly protests in the Palestinian territories.

It also follows a vote earlier this week by the central committee of Prime Minister Benjamin Netanyahu's Likud party in favour of extending Israeli sovereignty over settlements in the occupied West Bank.

The Likud vote was non-binding, but was a further expression of the hopes of many right-wing Israelis who oppose the creation of a Palestinian state.

The law approved on Tuesday determines that any ceding of lands considered by Israel to be part of Jerusalem would necessitate a two-thirds majority vote in parliament -- 80 out of 120 members of the Knesset.

It also enables changing the municipal definition of Jerusalem, which means that sectors of the city "could be declared separate entities", a statement from parliament read.

Israeli right-wing politicians have spoken of unilaterally breaking off overwhelmingly Palestinian areas of the city in a bid to increase its Jewish majority.

However, the new law is not necessarily definitive. It can be changed by a regular parliamentary majority of 61.

- 'Declaration of war' -

Israel occupied east Jerusalem and the West Bank in 1967. It later annexed east Jerusalem in a move never recognised by the international community.

It claims all of Jerusalem as its united capital, while the Palestinians see the eastern sector as the capital of their future state.

The issue is among the most contentious in the Israeli-Palestinian conflict.

"We've ensured the unity of Jerusalem," Education Minister Naftali Bennett, who heads Jewish Home, said after the vote.

"The Mount of Olives, the Old City... will forever remain ours," he wrote on Twitter.

Abbas's office said Trump's recognition and the Israeli law amounted to a "declaration of war on the Palestinian people and its political and religious identity".

The statement called the moves a "dangerous project for the future of the region and the world".

Saeb Erekat, secretary general of the Palestine Liberation Organisation, said the Israelis were moving ahead with such measures because the United States had stayed silent and signalled approval with Trump's Jerusalem declaration.

Hamas, the Islamist movement that runs the Gaza Strip, said Abbas should declare the end of the Oslo peace accords of the 1990s and withdraw the PLO's recognition of Israel.

Trump's December 6 decision upended decades of precedent and broke with international consensus, but maintains that Jerusalem's final status would have to be decided in negotiations between the two sides.

It has led to deep anger among Palestinians, with Abbas saying the United States can no longer play any role in the Middle East peace process.

On Monday, Abbas said the White House "has refused to condemn Israeli colonial settlements as well as the systematic attacks and crimes of the Israeli occupation against the people of Palestine".

Speaking of the Likud vote, he said "we hope that this vote serves as a reminder for the international community that the Israeli government, with the full support of the US administration, is not interested in a just and lasting peace".