Though Mr. Reinfeldt’s government had been critical of Israeli policies on settlements and the recent Gaza war, it refused to recognize Palestine as a sovereign state, arguing that the government there did not satisfy a basic criterion of sovereignty: to have control over its territory.

Image Prime Minister Stefan Lofven of Sweden in Parliament. Credit... Janerik Henriksson/European Pressphoto Agency

Mr. Lofven told Parliament on Friday that “the conflict between Israel and Palestine can only be solved with a two-state solution, negotiated in accordance with international law.” Such a solution, he said, “requires mutual recognition and a will to peaceful coexistence,” and “Sweden will therefore recognize the state of Palestine.” He did not specify when that would happen.

The announcement will be welcome news for President Mahmoud Abbas, the head of the Palestinian Authority, who has been pushing for formal statehood while negotiations with Israel over a permanent peace settlement have repeatedly faltered.

The Palestinians are seeking pledges for reconstruction aid to rebuild Gaza, which was badly damaged in the conflict. At a conference this month in Cairo, Mr. Abbas is expected to ask for $4 billion in aid for Gaza, which is still largely blockaded by both Israel and Egypt. His Fatah political movement and Hamas, the rival militant group that controls Gaza, have formed a unity government but are still arguing over how to make such a government function in practice. Even so, Riad Malki, the Palestinian foreign minister, issued a statement on Friday calling on other European Union nations to follow Sweden’s lead and recognize Palestinian statehood. He praised Sweden for its support for “the values of freedom and dignity and human rights,” and said that recognition of Palestine would aid “a comprehensive and just peace.” His statement continued: “In the name of the Palestinian people and the Palestinian leadership, we thank and salute the Swedish position.” He mentioned Malta, Cyprus, Poland, Hungary and Slovakia as examples of other European states that recognize Palestine.