Donald Trump Western Wall
US President Donald Trump visits the Western Wall, the holiest site where Jews can pray, in Jerusalem's Old City on May 22, 2017 RONEN ZVULUN/AFP/Getty Images

Stepping back from a campaign promise and incurring Israeli ire, President Donald Trump has kept the U.S. Embassy in Israel in Tel Aviv for now instead of moving it to Jerusalem, a cautious move aimed at bolstering prospects for an Israeli-Palestinian peace accord.

Trump avoided a step that threatened to inflame tensions across the Middle East and undermine a push for peace before it even started. Still, the White House insisted Trump was merely delaying, not abandoning, his oft-cited pledge to relocate the embassy.

"The question is not if that move happens, but only when," said White House press secretary Sean Spicer.

The praise from Palestinian and Arab leaders and the protest from Israelis showed just how far Trump has shifted from the unwavering support for Israel's policies that he expressed during the 2016 campaign. As president, Trump has proceeded cautiously, hoping to preserve his ability to serve as an effective mediator for one of the world's most intractable conflicts.

The decision is a blow to Israeli hard-liners and their American backers who have long urged the United States and others to build their embassies in Jerusalem. Israel considers the holy city to be its capital and insists the city must not be divided; Palestinians claim east Jerusalem as the capital for a future, independent state.

Israeli Prime Minister Benjamin Netanyahu's office said Trump's move had damaged prospects for peace by preserving "the Palestinian fantasy that the Jewish people and the Jewish state have no connection to Jerusalem." Intelligence Minister Yuval Steinitz, a senior member of government, accused Trump of "a surrender" to pressure from Arab and Muslim nations.

"The time has come to put an end to this farce," Steinitz told Army Radio.

Palestinian leaders cheered the move and said it improved the atmosphere for future negotiations by demonstrating Trump's seriousness about the process. Hussam Zomlot, the Palestinian envoy in Washington, said the move "gives peace a chance."

"We are ready to start the consultation process with the U.S. administration," he said after Trump's announcement.

IBTPOTY2017 Pictures of the week
23 May 2017: US President Donald Trump arrives to participate in a wreath-laying ceremony at the Yad Vashem holocaust memorial in Jerusalem Jonathan Ernst/Reuters

Trump had faced a Thursday deadline to determine how to proceed. Under a 1990s law passed by Congress, the president must move the U.S. Embassy to Jerusalem or the State Department loses half its funding for overseas facilities. But the president can waive the law if asserting that a waiver is in U.S. national security interests.

Presidents of both parties have consistently renewed the waivers for six-month stretches. The last waiver was signed by former President Barack Obama six months ago.

"For all the rhetorical flourishes, the president is conducting a very traditional approach to Arab-Israeli peacemaking," said Robert Satloff, who runs the Washington Institute for Near East Policy. "From Trump, who may have ideas about breaking the mold and 'the art of the deal,' this is a very conventional traditional way of going about narrowing the two sides, bringing them back to the debate and avoiding anything that might upset one or the other side too much."

Jerusalem's status is one of the most emotionally charged matters separating the Israelis and Palestinians. Each side stakes claims to a city that plays a central role in Judaism, Islam and Christianity.

During his visit to Israel last month, Trump visited the Western Wall, the Jewish holy site that sits just steps from the Al-Aqsa Mosque, revered in Islam. Both are in the Old City, part of east Jerusalem.

Israel has controlled the western part of Jerusalem, home to most of Israel's government institutions, since gaining independence in 1948. Two decades later, Israel captured east Jerusalem from Jordan in the 1967 Mideast War and annexed it, though without international recognition. The long-standing U.S. position is that Jerusalem's fate must be worked out through Israeli-Palestinian negotiations.

Trump had been lobbied heavily by Mideast leaders, notably Palestinian President Mahmoud Abbas and King Abdullah II of Jordan, to sign the waiver and prevent further instability and unrest in the region. Trump heard that message directly from Arab leaders last month when he visited Saudi Arabia at the start of his first overseas trip as president.