Jerusalem will remain Israel's 'undivided' capital, United States President Donald Trump said as he unveiled the long-anticipated Middle East plan alongside Israeli Prime Minister Benjamin Netanyahu at the White House.

The plan, which was three years in the making, offers a path towards a two-state solution and presents a "contiguous" territory for a Palestinian state, the US president said.

The Middle East plan unveiled by Trump proposes for the creation of a Palestinian state with a capital in eastern Jerusalem and with double the territory currently under their control. At the same time, under the plan, the US would recognise Israeli sovereignty over its settlement in West Bank area, with Jerusalem remaining the undivided capital of Israel.

"No Palestinians or Israelis will be uprooted from their homes" as part of the US plan, Trump said, as cited by the Times of Israel.

Palestinian President Mahmoud Abbas rejected the Middle East plan unveiled by US President Donald Trump today, remarking that his people's rights are "not for sale".

Palestinian President Mahmoud Abbas in a televised address from Ramallah said, "I say to Trump and (Isreali Prime Minister Benjamin) Netanyahu: Jerusalem is not for sale, all our rights are not for sale and are not for bargain. And your deal, the conspiracy, will not pass.”

In his address, Abbas said that Palestine "would not kneel" and resist the plan through "peaceful, popular means".

Palestinians also took to social media to slam the deal, with many dubbing it as "slap of the century" (in reference to the US President calling it 'deal of the century').

Iranian Foreign Minister Javad Zarif also called the Middle East plan a "nightmare for the region".

"The so-called 'Vision for Peace' is simply the dream project of a bankruptcy-ridden real estate developer. But it is a nightmare for the region and the world," Zarif tweeted, adding "hopefully, a wake-up call for all the Muslims who have been barking up the wrong tree”.