The European Union’s second highest court has ordered the removal of the Islamist group Hamas from a terrorist blacklist, citing procedural problems with the listing. It added, however, that the group’s assets should remain frozen for three months pending an almost certain appeal.

The decision came as the European parliament adopted a resolution supporting Palestinian statehood in principle in a compromise motion that did not follow some European national legislatures in backing immediate recognition of a Palestinian state.

Following a deal among the main parties, the motion that was carried stated: “[The European parliament] supports in principle recognition of Palestinian statehood and the two-state solution, and believes these should go hand in hand with the development of peace talks, which should be advanced.”

Social Democrat, leftwing and Green members of the European parliament had initially put forward motions for a symbolic vote on Wednesday to call on the EU’s 28 members to recognise Palestinian statehood now without conditions.

On a day of intense diplomacy around the Israeli-Palestinian issue, a draft resolution on Palestinian statehood is expected to be tabled later at the UN security council in New York.

Wednesday will also see a rare meeting of the Geneva conventions in Switzerland to discuss human rights in Gaza and the occupied West Bank. Although the meeting is being shunned by the US, Australia and Canada, Israeli efforts to persuade European states to stay away from the meeting were rebuffed.

Israel is also boycotting the one-day talks and has accused the host, Switzerland, of contributing to the politicisation of the Geneva conventions on the laws of war.

The judgment on Hamas followed the decision by the general court of the European Union – the EU’s second highest court – that the original listing of the group that governs Gaza had been flawed and based on conclusions derived from the media and internet, not sound legal rulings.

The court added in a statement that Wednesday’s decision to remove Hamas from the EU’s blacklist was based on procedural errors and did “not imply any substantive assessment of the question of the classification of Hamas as a terrorist group”.

The court’s decision followed an appeal filed by Hamas against its inclusion on the blacklist.

Hamas official Izzat al-Rishq welcomed the decision, saying: “This is the correction of an error and an injustice that was caused to Hamas.”

Israel’s prime minister, Binyamin Netanyahu, said he was not satisfied with the explanation that the delisting was only technical, and called for Hamas’s immediate re-designation.

“The burden of proof is on the EU and we expect them to immediately return Hamas to the list where everyone realises they should be,” Netanyahu said. “Hamas is a murderous terrorist organisation whose charter says that its aim is to destroy Israel. We will continue to fight it with determination and strength so that it will never realise its aims.”

The freeze on Hamas’s funds will remain in place for three months pending any appeal by the EU – it was reported that several European states were hurrying to provide evidence to demonstrate that Hamas should be listed as a terrorist group.

Hamas had claimed that the decision to put it on the EU terror list was also carried out without giving it an opportunity for a hearing and without sufficient evidence being presented.

According to some reports, the problem stemmed from the fact that intelligence agencies of European countries seeking to have Hamas listed as a terrorist group had been unwilling to provide classified material as part of the evidence process for listing, so that the classification of Hamas – as well as the Tamil Tigers in Sri Lanka – had relied on open source material derived from the media and online sources.

Hamas’s military wing was added to the European Union’s first-ever terrorism blacklist, drawn up in December 2001 in the wake of the September 11 attacks on the US. The EU blacklisted the political wing of Hamas in 2003.

The latest moves come as the Palestinian foreign minister confirmed that an Arab-backed draft on ending Israel’s occupation of lands captured in 1967 would be submitted later on Wednesday to the UN security council.

However, Riad Malki said the actual vote on the resolution might be put off, suggesting a compromise is in the works to avoid a clash in the council. The Jordanian-backed draft, which the US is almost certain to veto, sets November 2016 as a deadline for an Israeli withdrawal.

Malki told the Voice of Palestine radio that there would be further negotiations on the wording. He said that “we were informed that France has agreed with the United States, the United Kingdom and Jordan to continue talks” about the resolution to avoid a veto.

Malki’s comments follow a difficult meeting between the chief Palestinian negotiator, Saeb Erekat, and the US secretary of state, John Kerry, in London on Tuesday night.

At present, two rival texts for a resolution on the Palestinian issue are in circulation, a Jordan-backed draft that sets a deadline for ending the occupation and a European one, drawn up by France with input from the UK and Germany.

The US has indicated that it would veto the Jordanian draft, but there have been indications that it might be more open to the European version of the resolution.

According to sources familiar with it, that text sets a deadline for the end of negotiations – not the occupation – but calls for a freeze on Israeli settlements.

The activity on the international stage – following the collapse of US-brokered peace talks earlier this year – has come amid Palestinian efforts to internationalise peace efforts, citing the failure of US mediation over 20 years.