Palestinian president Mahmud Abbas made history in his people's long quest for statehood asking the United Nations to admit Palestine as a member state, stirring US and Israeli anger.
Abbas handed over the formal request in a white folder emblazoned with the Palestinian crest to UN chief Ban Ki-moon.
More than 120 nations have already recognized a Palestinian state and Abbas triggered wild applause and a standing ovation from some delegates when he stepped up to address the UN General Assembly, vowing the Palestinians were ready to return to peace talks if Israeli settlement activities cease.
Waving a copy of the document over the UN podium, Abbas said he had submitted an "application for the admission of Palestine on the basis of the June 4, 1967 borders" with Jerusalem as its capital.
But the dramatic move was immediately rejected by Israel and its backer the United States, which says it will veto Palestinian statehood if it reaches a vote in the Security Council.
The Security Council was due to start discussing the issue Monday, but a vote would be unlikely for weeks.
Explaining why he had pressed the Palestinian bid despite the opposition, Abbas said all previous peace efforts "were repeatedly smashed against the rocks of the positions of the Israeli government."
The Palestinian leader stressed the Palestinians did not want to "isolate or de-legitimize" Israel.
The Palestinians only wanted to end Israel's settlement policy, which he said will "destroy chances" of a two-state solution to the decades-old conflict.
"This settlement policy threatens to also undermine the structure of the Palestinian National Authority and even end its existence," he said.
Crowds of tens of thousands of Palestinians cheered across the West Bank, where they watched the speech on giant TV screens.
But Israel was scathing.
In his own address to the UN, Prime Minister Benjamin Netanyahu said: "The truth is that we cannot reach peace through UN resolutions but through negotiations. The truth is that so far the Palestinians have refused to negotiate."
And Israel's ultra-nationalist Foreign Minister Avigdor Lieberman said Abbas's move "proves that the Palestinians have no intention of negotiating with Israel."
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There was some hope for new impetus in the stalled peace process after international brokers known as the Quartet said after Abbas' speech that they wanted the two sides to return to talks within a month and set out a timetable for a peace deal by the end of 2012.
"We urge both parties to take advantage of this opportunity to get back to talks," Secretary of State Hillary Clinton, representing the United States in the Quartet, told reporters.
"The Quartet proposal represents the firm conviction of the international community that a just and lasting peace can only come through negotiations between the parties," she said.Related article:Quartet calls Israel, Palestinians back to the table
As the world began to weigh the consequences of Abbas's attempt to forever change the status quo, Palestinians spoke of their pride.
"I feel proud to have lived through this moment, for myself as a Palestinian and for all of our people," said Palestinian ambassador to the UN Riyad Mansour, recalling the "long struggle and sacrifices" of his people.
"The rules of the game completely changed today," added Majdi al-Khaldi, a diplomatic advisor to Abbas.
Crowds in Ramallah and across the West Bank were jubilant.
"With our souls, with our blood, we will defend Palestine!" they roared as widescreen televisions relayed live footage of Abbas holding up a copy of the membership demand he had personally handed to UN chief Ban Ki-moon.
But fearing violence, some 22,000 Israeli police and border police were on high alert with forces deployed along the Green Line between Israel and the West Bank, in annexed east Jerusalem, and around Arab Israeli towns.
Israeli officials have also warned of harsh retaliatory measures if the Palestinians succeed in their bid, including a halt to funding for the Palestinian Authority. Right-wing members of the government have gone so far as to call for annexation of the West Bank.
The United States is also likely to try to prevent Palestinian diplomatic triumph. The US ambassador to the United Nations, Susan Rice, sat stony-faced during Abbas's speech and wrote in a Twitter message that "shortcuts" were no way to achieve Israeli-Palestinian peace.
The United States has vowed to veto the bid at the UN Security Council, where the Palestinians in any case need to win the backing of nine of the 15 council members.
If that bid fails, they may well seek to be admitted as a non-member observer state by the General Assembly.