The Vatican has indirectly recognised Palestine as a state by referring to it as such, while announcing the forthcoming signing of a new treaty.

In an official statement, the Holy See said the text of an agreement on the "essential aspects of the life and activity of the Catholic Church in Palestine" has been successfully finalised.

In it, the Vatican referred to the Palestinian Authority as the State of Palestine, switching from its previous official use of 'Palestine Liberation Organization' (PLO).

The reference is repeated in the treaty text that is to be submitted to the respective authorities for approval and, once signed, will be the first legal document between the two parties listing both as equal states.

"Yes, it's a recognition that the state exists," said Vatican spokesman, Rev. Federico Lombardi, AP reported.

The move didn't come as a total surprise, as the Vatican had already welcomed a 2012 UN general assembly decision to grant Palestine observer status and listed the Palestinian envoy to the Holy See as a state representative in its yearbook.

Palestinian President Mahmoud Abbas is also due to visit Pope Francis at the weekend (16-17 May), for the canonisation of Palestine's first two Catholic Christian saints: Mother Marie Alphonsine and Mariam Baouardy.

The news nevertheless angered Israel, with the foreign ministry saying it was "disappointed" by the decision which it said "distances the Palestinian leadership from returning to direct and bilateral negotiations".

Since the PLO unilaterally declared the independence of Palestine in 1988, 135 of the 193 UN member states have recognised it as a state.