"Nobody has opened an embassy in Ramallah, and we think that this can be managed by the consulate in Jerusalem, which is a satisfactory solution for us," Foreign Minister Margot Wallstroem told public radio.
Sweden last month officially recognised the state of Palestine, a move that infuriated Israel which responded by recalling its ambassador to Stockholm.
Palestinian president Mahmud Abbas, whose headquarters are in the West Bank city of Ramallah, hailed Sweden's recognition as "courageous and historic".
According to the Palestinian Authority, around 135 countries have recognised the state of Palestine including several nations that are now EU members.
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