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Israel's foreign minister has accused Sweden of 'Ikea diplomacy' over its decision to recognise the state of Palestine.

Avigdor Lieberman described the move as "unfortunate" claiming Stockholm had a too simplistic approach to the Middle East, which, he said, is more complex than self-assemble furniture produced by the Swedish retail giant.

"It is too bad that the government of Sweden has chosen to adopt the measure that does a lot of damage and has no benefits." Lieberman said, Haaretz newspaper reported.

"Sweden must understand that relations in the Middle East are much more complicated than self-assembly furniture at Ikea."

Sweden took the historic step of officially recognising the state of Palestine earlier today.

"It is an important step that confirms the Palestinians' right to self-determination. We hope that this will show the way for others," foreign minister Margot Wallstrom said.

The Swedish foreign minister tweeted:

The US called the measure that was announced last month by prime minister Stefan Lofven as "premature".

Lofven maintains the Israeli-Palestinian conflict could only be solved through a two-state solution negotiated within the framework of international law.

"A two-state solution requires mutual recognition and a will to peaceful coexistence. Sweden will therefore recognise the state of Palestine," he said.

The statement elicited a heated reaction from Israel which summoned Sweden's ambassador to protest against what it perceived as a unilateral move.

The UN General Assembly recognised Palestine as a non-member observer state in 2012, paving the way to a wider official recognition from European states.