The United States on Monday vetoed a draft UN resolution rejecting President Donald Trump's decision to recognize Jerusalem as Israel's capital, after all 14 other Security Council members backed the measure.

The veto cast by US Ambassador Nikki Haley highlighted Washington's isolation over Trump's announcement that the US embassy will be moved from Tel Aviv to Jerusalem, effectively ignoring Palestinian claims on the city.

The policy shift by the Republican president, announced earlier this month, broke with international consensus, triggering protests and strong condemnation.

Key US allies Britain, France, Italy, Japan and Ukraine were among the 14 countries in the 15-member council that backed the measure asserting that any decisions on the status of Jerusalem "have no legal effect, are null and void and must be rescinded."

"The United States will not be told by any country where we can put our embassy," Haley told the council after the veto.

"What we witnessed here today in the Security Council is an insult. It won't be forgotten," she said, describing the measure as "one more example of the United Nations doing more harm than good in addressing the Israeli-Palestinian conflict."

Egypt put forward the draft resolution, which insists that Jerusalem is an issue "to be resolved through negotiations" between Israel and the Palestinians and expresses "deep regret at recent decisions concerning the status of Jerusalem" -- without specifically mentioning Trump's move.

The United States along with Britain, China, France and Russia can veto any resolution presented to the council, which requires nine votes for adoption.

- 'Thank you' from Netanyahu -

"Thank you, Ambassador Haley," Israeli Prime Minister Benjamin Netanyahu said on Twitter.

"On Hanukkah, you spoke like a Maccabi. You lit a candle of truth. You dispel the darkness. One defeated the many. Truth defeated lies. Thank you, President Trump. Thank you, Nikki Haley."

US Vice President Mike Pence will visit Jerusalem on Wednesday, wading into the crisis over one of the most controversial issues in the Israeli-Palestinian conflict.

Israel seized control of the eastern part of the city in the 1967 Middle East war and sees all of Jerusalem as its undivided capital. The Palestinians view the east as the capital of their future state.

The draft resolution had included a call on all countries to refrain from opening embassies in Jerusalem, reflecting concerns that other governments could follow the US lead.

It also demanded that all member-states not recognize any actions that are contrary to UN resolutions on the status of the city.

- Going back a 'century' -

Washington's closest allies, France and Britain, came out ahead of the vote to declare their backing for the measure, which they said was in line with the positions enshrined in previous UN resolutions.

French Ambassador Francois Delattre praised the Egyptian draft as a "good text" and argued that "without an agreement on Jerusalem, there will be no peace accord" between Israel and the Palestinians.

The status of the city must be decided through negotiations and "not by the unilateral decision of a third country that would bring us back a century," said the French envoy.

Despite outrage over the US decision, the United States "will continue to play an extremely important role in the search for peace in the Middle East," said British Ambassador Matthew Rycroft.

Several UN resolutions call on Israel to withdraw from territory seized during the 1967 war and have reaffirmed the need to end the occupation of that land.

The Palestinians had sought tougher language in the draft resolution that would have directly called on the US administration to scrap its decision, but the final version was softened to draw maximum support.

Backed by Muslim countries, the Palestinians are expected to turn to the UN General Assembly to adopt a resolution rejecting the US decision after the US veto.

No country has the power to veto resolutions at the 193-nation assembly.

While Haley considers "the veto a source of pride and strength, we will show her their position is isolated and rejected internationally," Palestinian foreign minister Riyad al-Malki said in Ramallah.

Palestinian president Mahmud Abbas has scrapped a meeting with Pence in protest at the Jerusalem announcement, and will instead head to Saudi Arabia to meet King Salman and Crown Prince Mohammed Bin Salman.

Turkey meanwhile said it hopes to soon open an embassy to Palestine in East Jerusalem.