The UN General Assembly on Thursday voted overwhelmingly to recognize Palestine as a non-member state, triggering scenes of joy on the streets of the Israeli-occupied West Bank.
In a major defeat for the United States and Israel, Palestinian president Mahmud Abbas won what he called a "birth certificate" for a Palestinian state, with the backing of 138 countries in the 193 member assembly.
Only nine countries voted against, including the United States, Israel and Canada. US allies Britain and Germany were among 41 that abstained, and France led a group of European powers backing the Palestinian bid.
Abbas embraced his foreign minister at the UN headquarters in New York while thousands of Palestinians celebrated with bursts of gunfire and cheers in the West Bank city of Ramallah.
But, underlining the bitter divisions that have stalled the Middle East peace process, Israeli Prime Minister Benjamin Netanyahu's office condemned what it called a "venomous" speech by the Palestinian leader.
The vote lifts the Palestinian Authority from an observer entity to a "non-member observer state" on a par with the Vatican.
Palestine has no vote on the General Assembly but is able to join UN agencies and potentially the International Criminal Court (ICC), a possible avenue to mount legal challenges against Israeli actions.
The Palestinian leadership says, however, that it wants to use the "historic" vote as a launchpad for renewed direct talks with Israel, which have been frozen for more than two years.
Abbas called the resolution "the last chance to save the two-state solution."
In a 22-minute speech laced with references to Israel's operation this month to halt rocket fire from Gaza, Abbas said Palestinians would accept "no less than the independence of the state of Palestine with East Jerusalem as its capital."
He warned, however, that time for an accord is running out, "the rope of patience is shortening and hope is withering."
Major Muslim nations rallied behind Abbas at the assembly.
"No longer can the world turn a blind eye to the long sufferings of the Palestinian people," said Marty Natalegawa, foreign minister of Indonesia, the world's most populous Muslim-majority state.
"The flag of Palestine should rise in this assembly next to ours," added Turkey's Foreign Minister Ahmet Davutoglu, calling for full membership for the Palestinians.
The United States and Israel immediately condemned the vote, which US Secretary of State Hillary Clinton called "unfortunate and counterproductive."
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Making a stern assessment to the General Assembly, US ambassador Susan Rice said it was "an obstacle to peace" because it would not lead to a return to direct talks between the Israelis and Palestinians.
"Today's grand pronouncements will soon fade. And the Palestinian people will wake up tomorrow and find that little about their lives has changed, save that the prospects of a durable peace have only receded," she said.
The United States has blocked a Palestinian application for full UN membership -- made by Abbas in September 2011 -- at the UN Security Council.
The office of Israeli Prime Minister Netanyahu slammed Abbas' move. "The world watched a defamatory and venomous speech that was full of mendacious propaganda," it said.
Following Abbas onto the UN stage, Israel's UN ambassador Ron Prosor said recognizing Palestine "will place further obstacles and preconditions to negotiations and peace" and could even lead to increased violence.
Abbas was warned earlier by UN leader Ban Ki-moon that the Middle East peace process is on "life support" and that both Netanyahu and Abbas must take action to revive talks.
The Palestinian leader did not make any reference to the possibility of joining the International Criminal Court -- a major worry for Israel which fears a possible investigation.
But Abbas said the Palestinian Authority would consult with other countries about new steps after its diplomatic status is bolstered.
"We will act responsibly and positively in our next steps, and we will to work to strengthen cooperation with the countries and peoples of the world for the sake of a just peace," he said.
Diplomats said the vote could give a boost to Abbas who faces a mounting challenge from Hamas after the Israeli offensive on Gaza.
But Britain and Germany, which abstained, believe the Palestinians should have waited until after US President Barack Obama installed his new administration and Israel held elections before making its UN bid.
And the Palestinians still face an uncertain future on the diplomatic stage. Despite their greater access to the UN system, there are divided opinions over whether they will be able to automatically join the ICC.
Palestinian envoys have said Abbas will not rush to join the court but could use it as leverage if Israel does not change its policies on settlements and other matters.
The Palestinian Authority and UN agencies that accept Palestinian participation could also lose hundreds of millions of dollars in financing because of the vote.
Washington has warned Abbas he risks losing around $200 million in aid, which is blocked in the US Congress.
Israel is considering freezing tax and customs funds it collects for the Palestinians.