Britain officially recognising a Palestinian state helped bring about peace in Gaza, Sir Keir Starmer has said.
The Prime Minister said the UK had been able to work "behind the scenes" for a ceasefire "precisely because of the approach this Government takes".
Addressing MPs following his return from the summit in Egypt, he told the Commons: "That does include our decision to recognise the state of Palestine.
"Because this move, taken alongside our allies France, Canada, Australia and others, helped lead to the historic New York declaration, where for the first time the entire Arab League condemned the atrocities of October 7, urged Hamas to disarm and, crucially, demanded that they end their rule in Gaza."
But Sir Keir also stressed that the peace deal signed on Monday was predominantly down to US President Donald Trump.
"This is his deal,” he said.
The agreement was signed by Trump at a ceremony in Sharm El Sheikh, along with negotiators from Egypt, Qatar and Turkey. Israel and Hamas were not present.
All of the 20 remaining living Israeli hostages were released by Hamas the same day, while Israel released more than 1,900 prisoners under the first phase of the deal.
Sir Keir told MPs the agreement provided "a moment of profound relief" as he paid tribute to both the hostages and the civilians killed in Gaza.
But he also stressed that the deal provided only "a chance to bring a terrible chapter in history, finally, to a close".
Negotiations will now follow on phase two of the deal, which involves Hamas laying down its weapons - an action the group is reported to have dismissed - and the rebuilding of Gaza under a "peace board" chaired by Mr Trump and potentially including former prime minister Sir Tony Blair.
Sir Keir told MPs: "While we celebrate the relief of peace today, making that peace last will be no less difficult a task, along with our allies, an absolute focus in the days and weeks ahead is the relentless implementation of this peace plan.
"That is no small challenge, and so we stand ready to deploy our diplomacy and expertise in three key areas."
He also called for the remains of the deceased hostages to be returned to their families "immediately" and urged Israel to lift "all restrictions" on aid entering Gaza.
The UK will provide an additional £20 million in humanitarian aid to provide "water, sanitation and hygiene products" to people in the territory, Sir Keir added.
Kemi Badenoch accused the Government of "rewarding terrorism" and accused pro-Palestine protesters of being "relatively silent about the good news of a ceasefire and hostage return".
The Conservative leader told the Commons: "In a move praised by Hamas, Labour decided to recognise a state of Palestine with no condition to release the hostages still held in the tunnels of Gaza, rewarding terrorism."
She later added: "The anti-Israel protesters who have turned our streets into theatres of hate have been relatively silent about the good news of a ceasefire and hostage return, showing us their real motivation."
Ms Badenoch called on the Government to "now do everything it can to eradicate antisemitism".
Ending her response to the Prime Minister, she said: "Britain is a great country and still a powerful one.
"We still have agency to shape the world around us. The Government must do better and show it has the backbone to use Britain's power to make a better world."
Sir Keir warned that now is "not the time for a fight about the role which any individual played" in progressing a Middle East peace deal.
He told the Commons: "I was surprised and saddened that she spent more time attacking what we actually did to help the process than even mentioning the humanitarian crisis in Gaza, without setting out in terms the number of people that have been killed, that are starving, been subjected to denial of aid, when the immediate task for any serious government is to work with allies to get that aid in at speed.”
Sir Keir faced an awkward moment at the Egypt summit when it appeared he had been invited up to address the world’s media by Trump - only for the President to apparently block him off.
