Government spokesman Mark Regev said the move had taken Palestinians and Israelis out of a negotiating process.

The General Assembly voted resoundingly to recognise the Palestinians as a non-member observer state on Thursday.

The Palestinians can now take part in UN debates and potentially join bodies like the International Criminal Court.

Palestinian President Mahmoud Abbas said it was the "last chance to save the two-state solution" with Israel.

There were celebrations on the streets of Ramallah in the West Bank as the result was announced.

But Mr Regev, a spokesman for Prime Minister Benjamin Netanyahu, denounced Mr Abbas' bid as "litany of libellous charges against Israel".

"This is negative political theatre that takes us out of a negotiating process. It's going to hurt peace," Mr Regev told the BBC.

'New ball-game'

Some 138 members of the assembly, including many EU states, Russia, China, India and Brazil voted in favour of recognising the Palestinians as a non-member observer state.

Israel the US and seven other states, including Canada, the Marshall Islands and Panama, voted against the resolution. Forty-one nations including the UK and Germany abstained.

"The General Assembly is called upon today to issue a birth certificate of the reality of the State of Palestine," Mr Abbas told the assembly in New York shortly before the vote.

Opponents of the bid say a Palestinian state should emerge only out of bilateral negotiations, as set out in the 1993 Oslo peace accords under which the Palestinian Authority was established.

US Secretary of State Hillary Clinton called the vote "unfortunate and counter-productive", saying it put more obstacles on the path to peace.

UN Secretary General Ban Ki-moon also called for more talks, saying the resolution underscored the need to resume meaningful peace negotiations.

The Palestinians are seeking UN recognition of a Palestinian state in the West Bank, Gaza and East Jerusalem, the lands Israel captured in 1967.

While the move is seen as a symbolic milestone in Palestinian ambitions for statehood, the Yes vote will also have a practical diplomatic effect, says the BBC's Barbara Plett at the UN in New York.

A successful application for membership of the ICC would give the court jurisdiction in the territories, and could potentially be used to accuse Israelis of war crimes.

"This is a whole new ball-game now. Israel will be dealing with a member of the international community, a state called Palestine with rights," the Palestinian Liberation Organisation's Hanan Ashrawi told the BBC.

"We will have access to international organisations and agencies and we will take it from there."

There had been lobbying by Israel and the US to try to delay the vote or change the text to obtain guarantees that no international legal action would be taken against Israel.

Settlement-building

Last year, Mr Abbas asked the UN Security Council to admit the Palestinians as a member state, but that was opposed by the US.

Two decades of on-off negotiations between Israel and the Palestinian Authority (PA) in the West Bank have failed to produce a permanent settlement, with the latest round of direct negotiations breaking down in 2010.

In January, several months of indirect "proximity talks" ended without any progress.

Palestinian negotiators insist that the building of Jewish settlements on occupied land must stop before they agree to resume direct talks.

Their Israeli counterparts say there can be no preconditions.

Mr Abbas was much criticised by many Palestinians for remaining on the sidelines of the conflict between the militant Hamas movement and Israel earlier this month in Gaza.

His Fatah movement, based in the West Bank, is deeply split from Hamas, which governs Gaza. Fatah has not been part of any peace talks with Israel and does not recognise Israel's right to exist.

Israel, the US and EU regard Hamas as a terrorist organisation.

Gaza's Prime Minister Ismael Haniyeh said in a statement sent to the BBC that Hamas support for the UN bid "is based on the 'rule of non-recognition of the occupier'... and the right of Palestinians to return to their homeland".

In the aftermath of the latest fighting, both Israel and Hamas have joined the international community in calling for a durable and comprehensive solution to the conflict.