"We reaffirm our commitment to the UN-approved principles for a Palestinian-Israeli settlement, which include the status of East Jerusalem as the capital of the future Palestinian state," the Thursday statement read.
It added: "At the same time, we must state that in this context we view West Jerusalem as the capital of Israel."
Israeli media interpreted the statement as a major shift in Russian policy, which has traditionally maintained that Jerusalem should be placed under international sovereignty in any future settlement.
According to Israeli daily The Jerusalem Post, Russia’s intention to recognize West Jerusalem as the capital of the Jewish state is to go into effect immediately.
The newspaper also reported that Russia’s ambassador to Israel intends to meet with officials from the Israeli Foreign Ministry to discuss the decision.
The same paper went on to note, however, that Israeli officials had “interpreted this [Russian statement] to mean that recognition of West Jerusalem as Israel's capital will only come once East Jerusalem becomes the capital of the Palestinian state".
Israel occupied the West Bank, including East Jerusalem, during the 1967 Middle East War. It annexed the entire city in 1980, claiming it as Israel’s “eternal” capital -- a move never recognized by the international community.
International law views the West Bank and East Jerusalem as "occupied territory" and considers all Jewish settlement-building activity on the land to be illegal.
Palestinians accuse Israel of waging an aggressive campaign to "Judaize" the historic city with the aim of effacing its Arab and Islamic identity and driving out its Palestinian inhabitants.