JERUSALEM -- Sweden on Thursday became the biggest Western European country to recognize a Palestinian state, and Israel swiftly reacted by withdrawing its ambassador from Stockholm in protest.

Coming during increased tensions between Arabs and Jews over Israel's plans to build 1,000 housing units in east Jerusalem, the move by Sweden's new left-leaning government reflects growing international impatience with Israel's nearly half-century control of the West Bank, east Jerusalem and its blockade of the Gaza Strip.

Foreign Minister Margot Wallstrom said Sweden, fulfilling a promise it had made when the Social Democratic-led government took office earlier this month, believes the Palestinians have met the international law criteria required for such recognition.

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"There is a territory, a people and government," she told reporters in Stockholm, adding that Sweden was the 135th country in the world to recognize a Palestinian state.

It is the third Western European nation to do so, after Malta and Cyprus.

Israel was quick to condemn Sweden's announcement, with Foreign Minister Avigdor Lieberman describing it as "a miserable decision that strengthens the extremist elements and Palestinian rejectionism."

"It's a shame that the government of Sweden chose to take a declarative step that only causes harm," he added.

Foreign Ministry spokesman Paul Hirschson said Israel's ambassador to Sweden was being recalled for consultations, but declined to say how long he would remain in Israel.

Hanan Ashrawi, a senior Palestinian official, welcomed the move by Sweden, a European Union member, as "a principled and courageous decision."

"It is our hope that other EU member states and countries worldwide will follow Sweden's lead and recognize Palestine before the chances for a two-state solution are destroyed indefinitely," Ashrawi said.

Israel says Palestinians can gain independence only through peace negotiations, and that recognition of Palestine at the U.N. or by individual countries undermines the negotiating process. Palestinians say Israeli Prime Minister Benjamin Netanyahu isn't serious about the peace negotiations.

The latest round of U.S.-brokered talks collapsed in April. American officials have hinted that Israel's tough negotiating stance hurt the talks, and Netanyahu has continued to settle Israelis in the West Bank and east Jerusalem.

Netanyahu said Wednesday that recent verbal attacks against him from the United States were merely because he was "defending Israel" and vowed to carry on with his policies despite the vitriolic rhetoric.

Netanyahu's remarks to parliament followed a report in The Atlantic this week in which unidentified U.S. officials lambasted the Israeli premier for his settlement policies and for undermining American peace efforts. The officials derided Netanyahu as cowardly and recalcitrant, among other insults.

More than 550,000 Israelis now live in the two areas, greatly complicating hopes of partitioning the area under a future peace deal. The two territories and the Gaza Strip are claimed by Palestinians for a future state.

While the U.S. and European powers have so far refrained from recognizing Palestinian independence, they have become increasingly critical of Israeli settlement construction. The 28-nation European Union has urged that negotiations to achieve a two-state solution resume as soon as possible.

In a symbolic move, British lawmakers earlier this month voted in favor of recognizing Palestine as a state.