Israeli Prime Minister Benjamin Netanyahu said Wednesday (Dec 13) he was "not impressed" by Muslim leaders' statements on Jerusalem after they urged the world to recognise the city's eastern sector as the capital of Palestine.

"We are not impressed by all these statements," Netanyahu said in a speech, saying he believed many countries would follow US President Donald Trump's lead and recognise Jerusalem as Israel's capital.

His comments came after an emergency summit of the world's main pan-Islamic body, the Organisation of Islamic Cooperation (OIC), on Trump's move last week.

"The Palestinians would do better by recognising reality and acting in favour of peace and not extremism," Netanyahu said.

"They should recognise another fact concerning Jerusalem: It is not only the capital of Israel, but we also maintain respect in Jerusalem for the freedom of worship for all religions, and we are the ones in the Middle East who do this like no one else."

With the Islamic world mired in division, the OIC summit in Istanbul fell well short of agreeing any concrete sanction against Israel or the United States. But their final statement declared "East Jerusalem as the capital of the State of Palestine" and invited "all countries to recognise the State of Palestine and East Jerusalem as its occupied capital".