Sweden’s new prime minister has announced the country will recognise a Palestinian state, becoming the first EU member in Western Europe to do so.

Social Democrat leader Stefan Loefven – who won last month’s general election – said the Nordic country wanted to bolster a two-state solution to the Israeli-Palestinian conflict.

Washington reacted quickly calling Stockholm’s recognition “premature”, while Palestinians cheered the decision as “courageous” and urged the rest of the European Union to follow suit.

“A two-state solution requires mutual recognition and the will to co-exist peacefully,” Loefven said in his inaugural address to parliament.

This should take place with respect for the “legitimate demands of the Palestinians and the Israelis as regards their right to self-determination and security”, he added.

Seven EU members in eastern European and the Mediterranean have already recognised a Palestinian state, namely Bulgaria, Cyprus, the Czech Republic, Hungary, Malta, Poland and Romania. Non-EU member Iceland is the only other western European nation to have done so.

But the United States cautioned against Sweden joining them.

“We believe international recognition of a Palestinian state is premature,” State Department spokeswoman Jen Psaki said.

“We certainly support Palestinian statehood, but it can only come through a negotiated outcome, a resolution of final status issues and mutual recognitions by both parties.”

Israelis and the Palestinians, Psaki said, must be the ones “to agree on the terms on how they live in the future two states, living side-by-side.”

Sweden’s new foreign minister Margot Wallstroem told public broadcaster SR that Sweden was “in good company since 130 countries in the world have already done the same”.

At least 112 countries have recognised a Palestinian state, according to an AFP count, although a Palestinian estimate puts the number at 134.

Senior Palestinian negotiator Saeb Erakat said the rest of the EU should follow Sweden’s example.

“We hope that all countries of the European Union will take the same courageous and remarkable decision… as there is no reason not to recognise the Palestinian state,” he said in the West Bank capital of Ramallah.