Jerusalem (AFP) - Workmen on Monday put up street signs to the US embassy due to open in Jerusalem in one week, a move hailed as historic by Israel but loathed by Palestinians.

Municipal workers erected signposts reading "US Embassy" in Hebrew, Arabic and English around the site, currently a US consular building, in the city's Arnona neighbourhood.

Breaking with decades of US diplomacy and international consensus President Donald Trump announced on December 6 the recognition of Jerusalem as the capital of Israel and the transfer of the embassy, located until now in Tel Aviv.

The embassy is to get a festive inauguration on Monday next week, to coincide with the 70th anniversary of the foundation of the state of Israel.

Small in size, it will initially occupy part of the consular workspace pending planning and construction of a purpose-built embassy, ​​a long-term project according to the US State Department.

Trump's unilateral decision delighted the Israelis and enraged the Palestinians, who want to make the eastern, mainly Palestinian, part of the city the capital of their future state and who say Trump's decision ignores their demands.

The question of Jerusalem is one of the thorniest of the Israeli-Palestinian conflict.

"This is not a dream -- it's reality," Jerusalem Mayor Nir Barkat said in a Twitter post that included photos of him up a ladder holding one of the newly installed signs.

"Jerusalem is the eternal capital of the Jewish people -- and the world is beginning to recognise this fact," he said, adding his thanks to Trump.

Israel considers the Trump declaration as recognition, albeit long delayed, of a historical fact.

To the Palestinians it is indicative of what they say is the White House's pro-Israel bias.

Senior Palestinian official Saeb Erekat called in a statement Monday for diplomats, "civil society organisations, and religious authorities to boycott the inauguration ceremony" of the Jerusalem embassy.

"Those who attend the ceremony will be sending an ominous message, a message that they encourage flagrant violations of international law and (of) the inalienable rights of the Palestinian people," he added.

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Israel occupied east Jerusalem in the 1967 Six-Day War and later annexed it.

The international community considers the annexation illegal and considers east Jerusalem as occupied territory.

Since the creation of the Jewish state it has not recognised Jerusalem as its capital and considers that the final status of the city must be negotiated with the Palestinians.

Guatemalan President Jimmy Morales has said his country's embassy will move to Jerusalem on May 16.