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The U.S. diplomatic mission to the Palestinians in Jerusalem said on Thursday that it had been redesignated and will report directly to Washington "on substantive matters", signalling an upgrade in ties ahead of a planned visit by President Joe Biden.

The former "Palestinian Affairs Unit" (PAU) was renamed the "U.S. Office of Palestinian Affairs" (OPA) under the move. Prior to becoming the PAU, it had been the U.S. consulate in Jerusalem and a focus of Palestinian statehood goals in the city.

Biden's predecessor, Donald Trump, outraged Palestinians - and delighted Israelis - by formally closing the consulate and redesignating it as the PAU within the U.S. Embassy that was moved to Jerusalem from Tel Aviv in 2018.

"The OPA operates under the auspices of the U.S. Embassy in Jerusalem, and reports on substantive matters directly to the Near Eastern Affairs Bureau in the State Department," a spokesperson for the mission said.

"The name change was done to better align with State Department nomenclature," the spokesperson said. "The new OPA operating structure is designed to strengthen our diplomatic reporting and public diplomacy engagement."

Palestinian officials had no immediate comment. They were due on Thursday to host State Department envoy Hady Amr in Ramallah, their seat of government in the occupied West Bank.

Under the Trump-era redesignation, the former consulate's staff and functions remained largely identical, but they were subordinate to the embassy rather than on a strict U.S.-Palestinian bilateral track.

Palestinians want East Jerusalem as the capital of a future state and saw Trump's embassy move as undermining that aspiration. Israel, which captured East Jerusalem in 1967, calls Jerusalem its indivisible capital.

The Biden administration has pledged to reopen the consulate, but Israel has said it would not consent to this and proposed that a consulate be opened in Ramallah instead. 

Israel's Foreign Ministry declined comment on Thursday's redesignation of the Jerusalem mission. (Reuters)