Iceland achieved a historic first by recognising Palestinian statehood.
The Icelandic parliament adopted the motion to accept Palestine "as an independent and sovereign state" based on pre-1967 borders without objections, becoming the first European country to pass the resolution. It was approved with 38 out of 63 votes in favour of the motion and 13 abstentions.
A cheering crowd, composed mainly of Palestinians, waited outside the parliament for the results of the vote.
"Iceland is the first country in western Europe to take this step," Ossur Skarphedinsson, the foreign minister of Iceland, told RUV, the Icelandic national broadcasting service, according to The Guardian.
Mr Skarphedinsson is now waiting for other Scandinavian countries to respond to the result before making a formal declaration.
The resolution urges Israelis and Palestinians to seek reconciliation through a peaceful agreement on the basis of international law and UN resolutions, such as the mutual recognition of the State of Israel and the State of Palestine.
The Icelandic parliament also recognised the Palestine Liberation Organisation (PLO) as the legitimate and legal representative of the Palestinian people. MPs further called for the rights of Palestinian refugees to return to their former homes.
Mr Skarphedinsson had told the UN General Assembly earlier in the week that Iceland was resolved to fully recognise Palestine and that it would be "in the spirit of reconciliation in the region". According to the Icelandic Review website, the minister was quoted as saying that it would have been foolish to deny Palestine the right to statehood in the midst of democratic revolutions taking place in the Middle East, ushered in by the Arab Spring.
Iceland's latest move comes after the Palestinians were admitted to the UN cultural organisation, UNESCO. The Nordic country was among 11 EU members to support the UNESCO resolution.