Canadian Foreign Minister John Baird met an Israeli minister in annexed Arab east Jerusalem this week, deliberately breaking a widely-observed diplomatic taboo, an Israeli newspaper reported on Thursday.

Baird met Justice Minister Tzipi Livni at her office in east Jerusalem, in a move normally avoided by visiting diplomats over concerns it could be seen as legitimising Israel's annexation of the city's eastern sector.

An Israeli working for an NGO that focusses on Canada-Israel relations told the Haaretz newspaper that the east Jerusalem meeting was a deliberate move with a political aim.

"Baird recognises the sensitivity but he wants to set a precedent," the source said.

Israel captured east Jerusalem during the 1967 Six Day War and later annexed it in a move never recognised by the international community.

It considers all of Jerusalem its "eternal, indivisible" capital, but the Palestinians want the eastern sector as capital of their future state.

"It is not common that foreign officials meet Israeli officials in east Jerusalem," admitted foreign ministry spokesman Yigal Palmor.

"The Canadians have been making a name for themselves by speaking out on the international scene in a way which is all too rare," Palmor told AFP, saying they were demonstrating an unusual "courage and moral stance."

"There should be nothing unusual about meeting Israel's justice minister in east Jerusalem (where the ministry is based). What is strange is that this is the exception," he said.

During his six-day visit to the region, Baird also visited troops in the Israeli-occupied sector of the Golan Heights, Syrian territory which Israel annexed in 1981 in another move never recognised by the international community.

A senior official at the foreign ministry told Haaretz that the Canadian embassy had advised Baird against both the east Jerusalem meeting and the Golan visit.

Canada is one of Israel's staunchest allies and was one of the few countries that opposed a successful Palestinian bid for upgraded status at the United Nations late last year.