AFP

Jurusalem, May 22: Right-wing Prime Minister Benjamin Netanyahu vowed on Thursday that Jerusalem would remain Israel's capital "forever" as the Jewish state marked the 42nd anniversary of the annexation of the city's mainly Arab sector.

"Jerusalem is the capital of Israel. It has always been, will remain so forever and will never be divided," Netanyahu said at a ceremony marking the occupation and annexation of east Jerusalem in the 1967 Six Day War.

The international community does not recognise Jerusalem as Israel's capital and the future of the city is a key stumbling block in negotiations with the Palestinians, who want east Jerusalem to be the capital of their future state.

Thousands of people, many waving Israeli flags, staged a parade in Jerusalem to celebrate the city's "reunification," while about 200 Palestinians and Israeli left-wing activists took part in a protest sit-in at the Old City's Damascus gate, chanting "No to occupation, yes to peace."

"The ties of the Jewish people and Jerusalem goes back thousands of years... Jerusalem will always remain united under our sovereignty," Netanyahu said at the rally at Ammunition Hill, which was the scene of major fighting between Israeli and Jordanian troops in the June 1967 war.

The anniversary is marked each year in accordance with the Jewish lunar calendar.

The Palestinians slammed Netanyahu's remarks as undermining the principle of a two-state solution which has formed the bedrock of the peace process over the past two decades.

"East Jerusalem is occupied Palestinian just like all the Palestinian territories occupied by Israel since June 4, 1967," president Mahmud Abbas's spokesman Nabil Abu Rudeina said.

"Such declarations defy the idea of a two-state solution," he said, urging US President Barack Obama to intervene in order to halt "the Israeli policies and these declarations that destroy all efforts to reach a just and comprehensive peace in our region."

But Israeli MPs from the ruling right-wing coalition on Thursday submitted a bill aimed at blocking any concessions to Palestinians on the status of Jerusalem.

The projected legislation would require any change in the city's boundaries to have the backing of a majority of 80 of the 120 parliamentary deputies, compared with 61 at present.

The MPs said the aim is to "guarantee the unity of the city."

The previous government had indicated the Jewish state might be willing to give up sovereignty on some Arab neighbourhoods of east Jerusalem.

But the Netanyahu government, which was sworn in on March 31, has ruled this out and he has stoked international criticism because of his refusal to endorse the creation of a Palestinian state.

Jerusalem's population currently stands at 760,800, with 492,400 Jews and 268,400 Arabs, according to a report published by the Jerusalem Institute for Israel Studies this week.

Some 74 percent of Arab children in Jerusalem live below the poverty line, compared with 48 percent of Jewish children, the study said.

The mortality rate among the Palestinian population stood at 5.1 deaths per 1,000, compared with 2.7 deaths per 1,000 among the Jewish population.