Israeli Prime Minister Benjamin Netanyahu challenged U.S. concerns over moving the American embassy to Jerusalem, in what Haaretz newspaper called his "first public dispute" with the Trump administration.

Since taking office in January, Trump has shown signs of shelving his campaign pledge to move the embassy from Tel Aviv, while vowing to do what is necessary to clinch a Middle East peace agreement. Trump had promised during his campaign to move the American embassy from Tel Aviv to Jerusalem, whose status is one of the thorniest issues of the Israeli-Palestinian conflict. But there has been no movement on that pledge so far. The Palestinians and the Arab world fiercely oppose a move, and the international community has warned that it could spark fresh unrest.

U.S. Secretary of State Rex Tillerson told NBC's "Meet the Press" on Sunday that Trump was still seeking to assess whether relocating the embassy would help or harm chances for Israeli-Palestinian peace.

"The president is being very careful to understand how such a decision would impact a peace process," Tillerson said, going on to suggest that Israel itself might be less than fully committed to a move. "I think it'll be informed, again, by the parties that are involved in those talks and most certainly Israel's view on whether Israel views it as being helpful to a peace initiative or perhaps a distraction."

Netanyahu hurried to remove any doubt -- and preempt protest within his right-wing government -- in a statement issued by his office.

"Israel's position has often been expressed to the American administration and to the world," it said. "The transfer of the American Embassy to Jerusalem not only will not harm the peace process, but the opposite. It will advance it by correcting a historic injustice and by smashing the Palestinian fantasy that Jerusalem is not the capital of Israel."

Israel regards Jerusalem as its eternal and indivisible capital and wants all foreign countries to base their embassies there. The relocation is strongly opposed by many U.S. allies as the Palestinians also claim the city as their capital.

Israel occupied the West Bank and east Jerusalem in 1967. It later annexed east Jerusalem in a move never recognized by the international community. In 1980, Israel declared "reunited" Jerusalem its capital in a move unrecognized by major states.

Since Trump took office last month, Israel has announced plans to build over 6,000 settler homes in the West Bank and east Jerusalem — occupied territories claimed by the Palestinians. The former U.S. administration of Barack Obama was deeply opposed to Israel's expansion of the settlements and in December withheld its veto from a U.N. Security Council resolution condemning the policy.

The international community regards all Israeli settlements in the occupied Palestinian territories as illegal and a major obstacle to Middle East peace. The area, captured by Israel in 1967, is not sovereign Israeli territory and Palestinians there are not Israeli citizens and do not have the right to vote.