US Secretary of State Mike Pompeo on Monday announced a major reversal of the US' longstanding policy on Israeli settlements in the occupied West Bank, rejecting a 1978 State Department legal opinion that deemed the settlements "inconsistent with international law."

The announcement, which breaks with international law and consensus, is the latest in a string of hardline, pro-Israeli moves that are likely to inflame tensions between the Trump administration and Palestinians and widen the divide between the Trump administration and traditional US allies in Europe.

“After carefully studying all sides of the legal debate, this administration agrees with President Reagan: the establishment of Israeli civilian settlements in the West Bank is not, per se, inconsistent with international law,” Pompeo said, citing President Ronald Reagan's 1981 assessment that the settlements were not “inherently illegal.”

Pompeo said the US government is “expressing no view on the legal status of any individual settlement” or “addressing or prejudging the ultimate status of the West Bank.”

He said the conclusion was “based on the unique facts, history and circumstances presented by the establishment of civilian settlements in the West Bank.”

An administration official said the State Department has been working toward this decision for nearly a year in coordination with the White House's peace team, which is led by Trump's son-in-law Jared Kushner. The official said the move does not change the administration's position that continued settlement construction is not conducive to Israeli-Palestinian peace.

The administration first planned to make the announcement last week, but held off amid an exchange of fire between Palestinian militants in Gaza and Israel, the official said.

The announcement is likely to further imperil the prospects for the Trump administration's long-touted but yet to be announced Middle East peace plan. Palestinian officials have dismissed the US’ role as an arbiter in any peace negotiations given the Trump administration's policy moves. Under President Donald Trump, the US moved its embassy in Israel from Tel Aviv to Jerusalem, shuttered the Palestine Liberation Organization office in Washington, and slashed funding to the Palestinians.