Israel signalled its displeasure on Sunday with Australia’s recognition of West Jerusalem as its capital.

The country’s prime minister, Benjamin Netanyahu remained silent on Canberra’s move at the weekly Israeli cabinet meeting, which he often uses to hold forth in public on diplomatic developments, but a minister close to him said it was a mistake to contradict the notion of Israeli control over the whole city.

Israel captured Arab East Jerusalem in the six-day war in 1967 and, in a move not recognised internationally, claimed the city as its capital. The Palestinians want East Jerusalem as capital of the state they hope to found in the occupied West Bank and the Gaza Strip.

The US president, Donald Trump, outraged Palestinians last year by recognising Jerusalem as the Israeli capital, a designation that did not acknowledge their claim on the east of the city though it left open the question of its final borders.

The Australian prime minister, Scott Morrison, said on Saturday that Canberra formally recognised West Jerusalem as Israel’s capital, but also reaffirmed his country’s support for a Palestinian capital in East Jerusalem under a two-state peace deal.

Israel’s foreign ministry responded with a tepid statement that called the Australian move “a step in the right direction”. Netanyahu said on Sunday said he had nothing to add to the statement.

Tzachi Hanegbi, Israel’s minister for regional cooperation and a Netanyahu confidant in the rightwing Likud party, was more openly critical. “To our regret, within this positive news they made a mistake,” he told reporters outside the cabinet room.

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He referred to Canberra as a “deep and intimate friend of many years’ standing”, but added: “There is no division between the east of the city and west of the city. Jerusalem is one whole, united. Israel’s control over it is eternal. Our sovereignty will not be partitioned nor undermined. And we hope Australia will soon find the way to fix the mistake it made.”

Morrison’s move first surfaced in October, when it was viewed cynically in Australia because it came days before a crucial byelection in an electorate with a strong Jewish representation. His party lost the poll.

The Palestinian chief negotiator, Saeb Erekat, said Saturday’s move was born of “petty domestic politics” in Australia. “All of Jerusalem remains a final-status issue for negotiations, while East Jerusalem, under international law, is an integral part of the occupied Palestinian territory,” he said.