During top-level talks in Israel on Sunday, White House hopeful Mitt Romney hailed Jerusalem as the capital of Israel, in an apparent endorsement of a position held by the Jewish state but never accepted by the international community.

"It is a deeply moving experience to be in Jerusalem, the capital of Israel," the Republican challenger said at the outset of a speech in the Holy City at which he laid out his positions on key foreign policy issues facing Israel.

Israeli Prime Minister Benjamin Netanyahu thanked him for his remarks, later telling him: "I want to thank you for those very strong words of support and friendship for Israel and for Jerusalem that we heard today.

"Jerusalem today is marking the destruction of the city thousands of years ago. As you see it's been rebuilt by the Jewish people, open to all the three great faiths, vibrant, bustling," he said, shortly after the end of Tisha B'Av, when Jews traditionally fast to mourn the destruction of the two Jewish Temples.

"And as you said, Jerusalem is the capital of Israel, and Jerusalem will always be the capital of Israel," he said in remarks communicated by his office.

The status of Jerusalem is one of the most contentious issues of the long-running Israeli-Palestinian conflict.

Israel, which occupied the largely Arab eastern sector during the 1967 Six-Day War and later annexed it, claims both halves of the city to be its "eternal and undivided capital."

But the Palestinians want the eastern sector as capital of their promised state and fiercely oppose any Israeli attempt to extend sovereignty there.

Most of the international community, including the United States, does not formally recognise Jerusalem as Israel's capital due to the ongoing conflict with the Palestinians, insisting the issue can only be resolved through final status negotiations.

All foreign embassies are located in Tel Aviv with consular representation in Jerusalem.

In 1995, the US Congress passed the so-called Jerusalem Embassy Act recognising Jerusalem as Israel's capital and stating that the US embassy should be moved there.

But an inbuilt waiver, which allowed the president to temporarily postpone the move on grounds of "national security" has been repeatedly invoked by successive US presidents, from Bill Clinton, George W. Bush and Barak Obama, meaning the law has never taken effect.

Almost four years ago, in August 2008 -- some three months before the US presidential election -- Obama, then a Democratic hopeful, made a similar statement about Jerusalem.

"Jerusalem will be the capital of Israel. I have said that before and I will say that again," Obama said on a tour of the southern Israeli town of Sderot, making clear that the status of the city was "a final status issue."