Trump warns Arab leaders of moving embassy from Tel Aviv to Jerusalem

US President Donald Trump on Tuesday warned feuding Arab Leaders that the US will be forced to shift its embassy in Tel Aviv to Jerusalem, a move that would be a de facto recognition of its status as Israel's capital.

Amidst warnings of widespread Middle East unrest and untold damage to the peace process, Trump told Palestinian leader Mahmud Abbas and Jordan's King Abdullah that the controversial move was coming, but did not give a time frame.

Trump ''informed the president (Abbas) on his intention to move the US embassy from Tel Aviv to Jerusalem,'' the Palestinian leader's office said in a statement.

While Trump is unlikely to immediately fulfil his campaign promise of moving the embassy in Tel Aviv to Jerusalem, de facto recognising Israel's claim on the disputed city, US officials said he will hold off for now, but reiterate his intent and even go as far as recognising Jerusalem as Israel's capital.

Trump's move follows the decades-old western policy - observed by both Republican and Democratic presidents - that west Jerusalem is and will continue to be part of Israel under any settlement and that Jerusalem's status can only be decided by negotiation.

The policy, however, puts Trump's efforts to broker Middle East peace at risk. Rather it could ignite the flames of conflict in a region already reeling from crises in Lebanon, Syria, Iraq, Yemen and Qatar.

During talks in Brussels with US secretary of state Rex Tillerson, the European Union, on the other hand, struck a middle path, with top EU diplomat Federica Mogherini warning that any move which risked undermining efforts to push the peace process ''must absolutely be avoided.''

''A way must be found through negotiations to resolve the status of Jerusalem as the future capital of both states, so that the aspiration of both parties can be fulfilled,'' she said.

In Cairo, Arab League chief Ahmed Abul Gheit warned it would be viewed as an act of ''clear aggression'' against the Arab and Muslim world.

Saudi Arabia also expressed ''grave and deep concern'' about the impact it would have on both the conflict and peace efforts, while the Palestinians said it would shatter any illusion about Trump's ability to fairly mediate in any talks.

''That totally destroys any chance that he will play a role as an honest broker,'' said Nabil Shaath, an adviser to Palestinian president Mahmud Abbas.

Meanwhile, Turkey's President Recep Tayyip Erdogan in a televised speech said, ''Mr Trump! Jerusalem is a red line for Muslims,'' echoing alarm expressed by Palestinian and Arab leaders.

Erdogan said any move to back Israel's claim to the city would mobilize ''the entire Islamic world'' and even prompt Ankara to sever its recently-renewed diplomatic ties with the Jewish state.

The armed Islamist Hamas movement has threatened to launch a new ''intifada'' or uprising.

Most of the international community, including the United States, does not formally recognise Jerusalem as Israel's capital, insisting the issue can only be resolved in final status negotiations.