In a declaration listing his government's priorities, Social Democratic leader Stefan Lofven told lawmakers that the Israeli-Palestinian conflict can only be resolved through a two-state solution requiring "mutual recognition" and a will from both sides to co-exist peacefully.
"Therefore Sweden will recognize the state of Palestine," Lofven said.
He didn't say when or how that would happen.
Palestinian Foreign Minister Riad Malki welcomed Lofven's announcement and called on other European Union countries to follow suit.
"In the name of the Palestinian people and the Palestinian leadership, we thank and salute the Swedish position," Malki said in a statement.
Lofven has built a left-leaning minority government of Social Democrats and Greens after winning Parliamentary elections last month.
He tapped former European Commissioner Margot Wallstrom to be foreign minister, while Magdalena Andersson becomes finance minister and Peter Hultqvist will head the Defense Ministry. All are Social Democrats.
Asa Romson, leader of the Greens, the junior coalition partner, became vice-prime minister and minister for climate and environment.
The coalition is expected to struggle to push its agenda through Parliament.
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