Israel and the United Arab Emirates have agreed to establish full diplomatic ties to normalise relations it has been announced.
A joint statement by Mr Trump, Israeli PM Benjamin Netanyahu and Abu Dhabi Crown Prince Mohammed Al Nahyan said they hoped the "historic breakthrough will advance peace in the Middle East".
Announced in a joint statement by Israel, the UAE and the US, the deal will see Israeli and Emirati delegations meet in the coming weeks. The statement said they would sign agreements on investment, tourism, direct flights, security, telecommunications, technology, energy, healthcare, culture and more.
"Opening direct ties between two of the Middle East's most dynamic societies and advanced economies will transform the region by spurring economic growth, enhancing technological innovation, and forging closer people-to-people relations," the joint statement said.
The UAE's ambassador to the US, Yousef Al Otaiba, said the deal with Israel was "a win for diplomacy and for the region".
"It is a significant advance in Arab-Israeli relations that lowers tensions and creates new energy for positive change," he added.
Biden welcomed the agreement as historic. “The UAE’s offer to publicly recognise the state of Israel is a welcome, brave, and badly needed act of statesmanship,” the presidential contender said.
The UAE and Israel will also join the US to launch a "Strategic Agenda for the Middle East", with the three leaders noting that they "share a similar outlook regarding the threats and opportunities in the region, as well as a shared commitment to promoting stability through diplomatic engagement, increased economic integration, and closer security co-ordination".
Meanwhile, the Palestinians have warned that such a move may destroy their hopes of a viable future independent state and violate international law - a stance supported by much of the international community.
The UAE Minister of State for Foreign Affairs, Anwar Gargash, said the UAE's recognition of Israel was "a very bold step" to stop the "ticking time bomb" of Israel's annexation of the West Bank.
UK Prime Minister Boris Johnson said: " it was my profound hope that annexation did not go ahead in the West Bank and today's agreement to suspend those plans is a welcome step on the road to a more peaceful Middle East".