Honduran President Juan Orlando Hernandez will travel to Israel on Friday to inaugurate a "diplomatic office" in Jerusalem, recognizing the holy city as Israel's capital.
The diplomatic office in the disputed city will be an extension of Honduras' Tel Aviv-based embassy.
"For me it's the recognition that Jerusalem is the capital of Israel," Hernandez said on Tuesday, according to AFP.
The foreign ministry said in a statement Israel had proposed that Honduras move its embassy to Jerusalem, which is being "analyzed and evaluated in the international and national context."
US President Donald Trump sparked a deterioration in relations between Washington and the Palestinian authorities last year when the United States moved its embassy to Jerusalem.
Guatemala and Paraguay followed suit while Brazil said it was studying the possibility. Paraguay reversed its decision after just four months.
Moving an embassy to Jerusalem is highly contentious. Israel claims all of Jerusalem as its capital, while Palestinians view east Jerusalem as the capital of their future state.
Traditionally, most diplomatic missions in Israel have been in Tel Aviv as countries maintained a neutral stance over the status of Jerusalem.
