SYDNEY (AP) — Australian Prime Minister Scott Morrison says his government has decided to formally recognize west Jerusalem as Israel's capital, but won't move its embassy until there's a peace settlement.

He says Australia will recognize east Jerusalem as Palestine's capital only after a settlement has been reached on a two-state solution. The Australian Embassy won't be moved from Tel Aviv until such a time.

While the embassy move is delayed, Morrison says the government will establish a defense and trade office in Jerusalem and will also start looking for an appropriate site for the embassy.

He says in a speech Saturday: "The Australian government has decided that Australia now recognizes west Jerusalem, as the seat of the Knesset and many of the institutions of government, is the capital of Israel."