The European Union has rejected parts of the proposed US plan for the Middle East, saying it broke with "internationally agreed parameters", and any Israeli annexation of Palestinian land would be subject to challenge.

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President Donald Trump's plan, announced last week, was welcomed by Israel and rejected outright by the Palestinians.

It would give Israel most of what it has sought during decades of conflict, including nearly all Palestinian land on which it has built settlements.

The EU, which often takes time to respond to international developments because of a need for unanimity among its 27 members, had said last week that it needed to study the Trump plan before it would give its verdict.

It made its conclusions public on Tuesday in a statement from EU foreign policy chief Josep Borrell.

"To build a just and lasting peace, the unresolved final status issues must be decided through direct negotiations between both parties," Borrell said, noting the issues of the borders of a Palestinian state and the final status of Jerusalem were among those still in dispute.

"The US initiative, as presented on 28 January, departs from these internationally agreed parameters," Borrell said.

Steps by Israel to annex Palestinian territory, "if implemented, could not pass unchallenged", Borrell said.

EU policy in the Middle East tends to be cautious, as the bloc includes members with varying degrees of sympathy towards the Palestinians and Israel.

Some EU members have already recognised a Palestinian state, although the bloc as a whole says this is a matter to be resolved in peace talks.

The EU condemned Trump's decision in 2017 to recognise Jerusalem as Israel's capital, saying Washington had compromised its position as a mediator for peace.

EU governments reject Israeli settlements on land Israel has occupied since a 1967 war, including the West Bank, East Jerusalem and the Golan Heights, and Borrell reiterated that position.

Germany, the EU's most powerful player, earlier called for a balanced approach.

"Only a negotiated two-state solution, acceptable to both sides, can lead to a lasting peace between Israelis and Palestinians," German Foreign Minister Heiko Maas said.

The United Kingdom, which left the EU on Friday and has long had a special relationship with Washington, gave the warmest reaction.

"This is clearly a serious proposal, reflecting extensive time and effort," British Foreign Secretary Dominic Raab said in a statement.

On Monday, the 57-member Organisation of Islamic Cooperation (OIC) rejected Trump's plan, as it called on all member countries "not to engage with this plan or to cooperate with the US administration in implementing it in any form".

Palestinian leaders have denounced the plan as "a new Balfour Declaration" that heavily favoured Israel and would deny them a viable independent state.