In a six-minute video statement, Sir Keir Starmer says the recognition shows the people of both Israel and Palestine that there can be a "better future".
The prime minister says: "This solution is not a reward for Hamas because it means Hamas can have no future, no role in government, no role in security."
He adds: "We call again on the Israeli government to lift the unacceptable restrictions at the border, stop these cruel tactics and let the aid surge in.
"With the actions of Hamas, the Israeli government escalating the conflict, and settlement building being accelerated in the West Bank, the hope of a two-state solution is fading, but we cannot let that light go out.
"That is why we are building consensus with leaders in the region and beyond, around our framework for peace."
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