Secretary of State Mike Pompeo announced Monday that the United States is softening its position on Israeli settlements in the occupied West Bank, the latest in a series of Trump administration moves that weaken Palestinian claims to statehood.

Pompeo rejected a 1978 State Department legal opinion that held that civilian settlements in the occupied territories are "inconsistent with international law." The move immediately put the U.S. at odds with other nations working to end the conflict.

The Trump administration views the opinion, the basis for long-standing U.S. opposition to expanding the settlements, as a distraction and believes any legal questions about the issue should be addressed by Israeli courts, Pompeo said.

"Calling the establishment of civilian settlements inconsistent with international law has not advanced the cause of peace," Pompeo said. "The hard truth is that there will never be a judicial resolution to the conflict, and arguments about who is right and who is wrong as a matter of international law will not bring peace."

U.S. moves that have weakened Palestinian efforts to achieve statehood have included President Donald Trump's decision to recognize Jerusalem as Israel's capital, the movement of the U.S. Embassy to that city and the closure of the Palestinian diplomatic office in Washington.

Palestinian President Mahmoud Abbas' spokesperson, Nabil Abu Rdeneh, condemned Pompeo's announcement and said settlements are illegal under international law. "The U.S. administration has lost its credibility to play any future role in the peace process," he said.

WATCH: Pompeo announces U.S. policy shift on Israeli West Bank settlements

The United States on Monday effectively backed Israel's right to build Jewish settlements on the occupied West Bank by abandoning its four-decade position that they were "inconsistent with international law." 0:39

Even though the decision is largely symbolic, it could give a boost to Israeli Prime Minister Benjamin Netanyahu, who is fighting for his political survival after he was unable to form a coalition government following recent elections.

In addition, it could spell further trouble for the administration's oft-promised peace plan, which is unlikely to gather much international support by endorsing a position contrary to the global consensus.

Adam Austen, press secretary to Minister of Foreign Affairs Chrystia Freeland, told CBC News that Canada does not recognize permanent Israeli control over territories in the West Bank.

"Canada is committed to the goal of a comprehensive, just and lasting peace in the Middle East, including the creation of a Palestinian state living side by side in peace and security with Israel," Austen said.

"We agree with the UN Security Council that these settlements are a serious obstacle to achieving just, lasting and comprehensive peace."

The EU was also swift to denounce the move, saying that it continued to believe Israeli settlement activity in occupied Palestinian territory was illegal under international law and eroded prospects for lasting peace.

"The EU calls on Israel to end all settlement activity, in line with its obligations as an occupying power," EU foreign policy chief Federica Mogherini said in a statement.

The Netanyahu government was dealt a blow on settlements just last week when the European Court of Justice ruled products made in Israeli settlements must be labelled as such.

The Hansell Memorandum

The 1978 legal opinion on settlements is known as the Hansell Memorandum. It had been the basis for more than 40 years of carefully worded U.S. opposition to settlement construction that had varied in its tone and strength depending on the president's position.

The international community overwhelmingly considers the settlements illegal. This is based in part on the Fourth Geneva Convention, which bars an occupying power from transferring parts of its own civilian population to occupied territory.

In the final days of the Obama administration, the U.S. allowed the UN Security Council to pass a resolution declaring the settlements a "flagrant violation" of international law.

Pompeo said that the U.S. would not take a position on the legality of specific settlements, that the new policy would not extend beyond the West Bank and that it would not create a precedent for other territorial disputes, he said.

He also said the decision did not mean the administration was prejudging the status of the West Bank in any eventual Israeli-Palestinian peace agreement.

A view shows Palestinian houses in the village of Ein Yabrud with the Jewish settlement of Ofra seen in the background, in the Israeli-occupied West Bank. (Raneen Sawafta/Reuters)

The shift is a victory for Netanyahu, a longtime booster of the settlements, and had been strongly supported by U.S. Ambassador to Israel David Friedman and major Trump donor Sheldon Adelson. Friedman was a major fundraiser for the settlements before becoming ambassador.

It may be taken by Netanyahu and the settlement movement as a green light for additional construction on, or even annexation of, lands claimed by the Palestinians for a future state.

The anti-settlement monitoring group Peace Now, along with reporting by The Associated Press, has found a sharp increase in settlement planning and construction since Trump took office.

For Netanyahu, the welcome boost comes at a time when he has been weakened domestically by mounting legal woes and two inconclusive elections this year.

Unable to secure a parliamentary majority, Netanyahu is now anxiously waiting to see if his chief rival, Benny Gantz, can put together a coalition. If Gantz fails, the country could be forced into a third election with Netanyahu facing the distraction of a trial.

Policy reflects 'historical truth': Netanyahu

Netanyahu's office released a statement saying the policy shift "rights a historical wrong" concerning settlements.

"This policy reflects an historical truth — that the Jewish people are not foreign colonialists in Judea and Samaria," it said, using the Israeli terms for the West Bank.

Gantz, meanwhile, applauded Pompeo's "important statement, once again demonstrating its firm stance with Israel and its commitment to the security and future of the entire Middle East."

Israel captured the West Bank and east Jerusalem in the 1967 Mideast war and quickly began settling the newly conquered territory.

Today, some 700,000 Israeli settlers live in the two areas, which are both claimed by the Palestinians for their state.

Israeli Prime Minister Benjamin Netanyahu appears before supporters during a Likud conference in Tel Aviv on Sunday. The U.S.'s move is a victory for Netanyahu, who is a longtime supporter of the settlements. (Menahem Kahana/AFP via Getty Images)

After the war, it immediately annexed east Jerusalem, home to the holy city's most important religious sites, in a move that is not internationally recognized.

But Israel has never annexed the West Bank, even as it has dotted the territory with scores of settlements and tiny settlement outposts.

While claiming the fate of the settlements is a subject for negotiations, it has steadily expanded them. Some major settlements have over 30,000 residents, resembling small cities and serving as suburbs of Jerusalem and Tel Aviv.

Palestinians and most of the world say the settlements undermine hopes for a two-state solution by gobbling up land sought by the Palestinians.

Israel's settlement activities have also drawn attention to its treatment of Palestinians.

While Jewish settlers can freely enter Israel and vote in Israeli elections, West Bank Palestinians are subject to Israeli military law, require permits to enter Israel and do not have the right to vote in Israeli elections.

WATCH | CBC's Margaret Evans reports from Hebron and Ramallah on some Palestinians' skepticism about the likelihood of a two-state solution: