Donald Trump's move to recognise Jerusalem as Israel's capital will make it more difficult to reach peace in the region, Prime Minister Jacinda Ardern says.
US President Donald Trump reversed decades of official policy this morning, announcing plans to move the American embassy from Tel Aviv to Jerusalem.
Asked by reporters for her response, Ms Ardern spoke out against the move.
"This won't take us further," she said. "I have no doubt that this will make things difficult."
Ms Ardern said the status of the contested city should be decided as part of wider efforts to resolve the conflict between Israel and Palestine.
"We've always supported a two-state solution ... Jerusalem and issues around religious sites need to be resolved within the context of establishing that two-state solution."
Israeli Prime Minister Benjamin Netanyahu has urged other countries to follow President Trump's lead, but the Palestinians called it a "kiss of death" to the two-state solution.
The two-state solution envisages an independent State of Palestine alongside Israel, west of the Jordan River.
'It's an American decision'
Foreign Minister Winston Peters wouldn't go as far as Ms Ardern, only saying that the decision was US business.
"It's an American decision. We've got no control over that, but we don't intend to follow suit in that context."
Asked whether the move could be destabilising, Mr Peters said "only time will tell".
He confirmed NZ's diplomatic post for Israel would remain in Ankara, Turkey, where it had been for more than a decade.
"We've got no intention of changing at this point in time."
New Zealand should be doing its best to promote peace in the region "regardless of this decision", Mr Peters said.