US vice-president Mike Pence has told Israel’s parliament that the US embassy will move to Jerusalem by the end of 2019, receiving a rousing ovation as he pledged to forge ahead with a plan that has set off weeks of unrest and thrown peace efforts into disarray.

The plan to accelerate the move of the embassy, announced in the first-ever address of a sitting American vice-president to the Knesset, marked the key moment of Pence’s three-day visit to Israel celebrating President Donald Trump’s decision last month to recognise Jerusalem as Israel’s capital.

“The United States has chosen fact over fiction, and fact is the only true foundation for a just and lasting peace,” Pence said.

“Jerusalem is Israel’s capital and as such President Trump has directed the State Department to immediately begin preparations to move the United States embassy from Tel Aviv to Jerusalem,” he said, adding the embassy “will open before the end of next year”.

The speech drew an angry denunciation from Palestine, with chief negotiator Saeb Erekat saying it “has proven that the US administration is part of the problem rather than the solution”.

Yet Pence, in an interview after the speech, said he remained hopeful that the Palestinians would re-enter negotiations. “Our message to President Abbas and the Palestinian Authority is the door’s open. The door’s open. President Trump is absolutely committed to doing everything the United States can to achieve a peace agreement that brings an end to decades of conflict.”

The vice-president said the US was “exploring a range of options” on the exact location of the embassy but that Trump had been “very clear. He wants the American embassy to be open in Jerusalem before the end of next year”.

Pence said the State Department would be providing more details in the “next several weeks”.

Pence was preceded on the dais by Israel’s prime minister Benjamin Netanyahu, who lavished his guest with praise and gratitude. It was all part of an exceptionally warm welcome for Pence in Israel, which has been overjoyed by Trump’s policy change on Jerusalem.

But the move has infuriated the Palestinians, with whom Pence is not meeting, and upset America’s Arab allies as well.

A group of Arab politicians voiced their displeasure at the administration’s pro-Israel bias by raising banners reading “Jerusalem is the capital of Palestine” and heckling Pence at the beginning of his address. They were then forcibly removed from the plenum.

The main Arab party in the Israeli parliament warned that it would boycott Pence. Its leader, Ayman Odeh, vowed they would not provide a “silent backdrop” to a man he called a “dangerous racist”.

Pence said he was humbled to speak before such a “vibrant democracy”, before delving into his prepared remarks about the two countries’ “unbreakable bond”.

“I am here to convey one simple message: America stands with Israel. We stand with Israel because your cause is our cause, your values are our values and your fight is our fight,” he said. “We stand with Israel because we believe in right over wrong, good over evil and liberty over tyranny.”

Pence urged the Palestinians to return to negotiations. “Peace can only come through dialogue,” he said, adding that the US would support a two-state solution but only if both sides support it. Netanyahu’s hard-line government is dominated by opponents to Palestinian statehood.

Prior to his arrival, Pence visited Egypt and Jordan, where he was warned by King Abdullah II that he had to “rebuild trust and confidence” as a result of the Jerusalem move.