Netanyahu said this will be "a great moment for the citizens of Israel, and this is a historic moment for the State of Israel."
"On behalf of the entire government and people, I would like to thank President Trump for both his leadership and his friendship," he said.
The U.S. announcement on Friday followed Trump's declaration on Dec. 6 to recognize Jerusalem as the capital of Israel and order to move the U.S. embassy from Tel Aviv to Jerusalem , breaking away from a long-held U.S. policy that considered the Israeli-annexed East Jerusalem an occupied territory.
"This will have significant and historic long-range implications," Netanyahu said. "We will celebrate it together, all citizens of Israel."
Israel annexed East Jerusalem along with the rest of the West Bank and Gaza Strip in the 1967 Middle East war.
Israel has claimed East Jerusalem , which the Palestinians regard as the capital of its future independent state, as part of its "indivisible capital," in a move never recognized internationally.