Pope Francis and Palestinian President Mahmoud Abbas on Saturday met here to open a Palestinian embassy in the Vatican City.
"We are very grateful about the role that the Holy See has played for a just and lasting peace in the Holy Land, and for having opened an embassy of Palestine in the Vatican for first time," CNN quoted Abbas as saying on Saturday.
"We are proud to be the birthplace of Christianity and about having one of the oldest Christian communities in the world."
Abbas that peace could suffer if the incoming US Trump administration goes ahead with plans to move the US Embassy to Israel from Tel Aviv to Jerusalem.
Speaking through an Italian translator, Abbas said he had only heard of the proposal by US President-elect Donald Trump to move the embassy to Jerusalem, and couldn't comment officially unless and until it happened.
But he added: "If this is the decision, to transfer the embassy to Jerusalem, it will not help peace and we hope it doesn't happen."
The Palestinians strongly oppose the move, saying it would kill any hopes for negotiating an Israeli-Palestinian peace agreement and rile the region by undercutting Muslim and Christian claims to the holy city.
Trump hasn't yet laid out a clear Mideast policy, but has signalled he will be more sympathetic to Israel's hard-line right than previous administrations.
He has also vowed to move the US Embassy.
Abbas has written to Trump warning of the risks of such a move and asked him to reconsider, while also flagging the concern to Arab and other world leaders, said the Palestinian foreign minister, Riyad Malki.
The Vatican has long sought an internationally guaranteed status for Jerusalem that safeguards its sacred character.
The Vatican has long held that a two-state solution was the best road to peace in the Holy Land, and the Pope has taken steps to raise the profile of a Palestinian state by formally recognising Palestinian statehood in a legal document in May 2015.
The Vatican in November 2012 referred to Palestine as a State when the UN voted to recognise it as a non-member observer.
Issa Kassissieh, the Palestinian ambassador to the Holy See, called the move "a significant achievement for the Palestinian people".
Israel has yet to respond to the news.
Many other countries, including Israel, have embassies in the Vatican City.
The Pope in June 2014 hosted Abbas and late Israeli President Shimon Peres for an unprecedented prayer ceremony at the Vatican.
The UN General Assembly adopted a resolution in September 2015 allowing the "State of Palestine" and the Vatican to raise their flags outside of UN headquarters and UN offices.
Abbas said he will attend a conference in Paris on Sunday to explore ways to restart the Israeli-Palestinian peace process.
US Secretary of State John Kerry is among officials from more than 70 nations who plan to attend the conference. Israel has said it will not participate.
