Lebanon's foreign minister has told an emergency Arab League meeting that imposing economic sanctions should be considered against the US over its embassy relocation move.

"Preemptive measures (must be) taken against the decision... beginning with diplomatic measures, then political, then economic and financial sanctions," said Gebran Bassil during an Arab League meeting held in Cario on Saturday.

US President Donald Trump on Wednesday defied global warnings and said Washington formally recognized Jerusalem al-Quds as the “capital” of Israel and would begin the process of moving its embassy to the occupied city, breaking with decades of American policy.

“Could this calamity bring us together and wake us from our slumber? Let it be known that history will never forgive us and our future will not be proud of what we have done,” added Bassil.

Arab League chief Ahmed Aboul-Gheit also called on world nations to recognize the State of Palestine with East Jerusalem al-Quds as its capital.

A photo taken on December 9, 2017, shows a general view of the Arab League headquarters during an emergency foreign ministers meeting in the Egyptian capital Cairo, following the US president's controversial recognition of Jerusalem al-Quds as Israel's capital.

He added that Trump’s decision raised a question over Washington’s role as a peace mediator, not just in Palestine but the whole world. “The decision amounts to the legalization of occupation,” he added.

"The decision by the US administration is in its essence legitimizing the occupation and admitting and allowing their stance by force. It is a waste of international legitimacy and the principles of justice, and therefore has placed he who took (the decision) in a state of conflict with the collective will of the international community," he stressed.

Palestinian Foreign Minister Riyad Al-Maliki called on members of the league to instruct their UN envoys to submit a draft resolution to Security Council to condemn Trump’s decision, which “betrays its hostility and bias against the Palestinian people.”

He also called on world nations to recognize the State of Palestine with East Jerusalem al-Quds as its capital.

"I expect from you to commission the Arab block (in the Security council) to immediately act in presenting a draft resolution to the security council that rejects this American decision. We also call upon all Arabs in light of this American decision that challenged, not only Arabs and Muslims, but the world as a whole, to quickly visit Jerusalem, so as not to leave it as a victim to the American decision and Israeli threat," he added.

No peace unless al-Quds is free

Jordanian foreign minister also stressed that there will be no peace and security in the region unless Jerusalem al-Quds is free.

"We want peace as a strategic option, which we demand for all of the region's peoples completely and indefinitely. However, there will be no peace without a free and independent Palestine, there will be no peace unless Jerusalem is free, and is the capital of Palestine," said Ayman Al Safadi.

Abbas shuns Pence meeting

Meanwhile, Palestinian President Mahmud Abbas's diplomatic adviser said that Abbas will reject to meet US Vice President Mike Pence during his scheduled visit to the region later in the month.

"There will be no meeting with the vice president of America in Palestine... The United States has crossed all the red lines with the Jerusalem decision," he added.

Palestinian Minister of Foreign Affairs Riyad al-Maliki holds a press conference after the Executive Committee Meeting of the Organisation of Islamic Cooperation (OIC) on August 1, 2017 in Istanbul.

Arab League final statement

Following the meeting, the Arab League issued a statement calling on the US to retract its decision to recognize Jerusalem al-Quds as Israel's capital, adding that such a move would only amplify violence throughout the region.

It added that Trump's announcement was a "dangerous violation of international law" which has no legal impact and was "void.

"The decision has no legal effect ... it deepens tension, ignites anger and threatens to plunge region into more violence and chaos," read the statement.

Clashes continue in East Jerusalem al-Quds

Clashes between Israeli security forces and Palestinian protesters in al-Quds continued on Saturday over the Trump administration's divisive decision.

Palestinian protestors threw objects at Israeli soldiers and set trash cans on fire, while others held guns to the head of an effigy of Trump, before burning it.

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Israeli police disperse Palestinian protesters on December 9, 2017, in East Jerusalem al-Quds.

Trump's declaration has sent shock waves throughout the Muslim world, and even prompted warnings from Washington’s allies in the West that it would bring more chaos to the region.