(reuters) -- President Donald Trump reversed decades of U.S. policy on Wednesday and recognised al-Quds as the capital of Israel, imperilling Middle East peace efforts and upsetting the Arab world and Western allies alike.

"We caution against the dangerous repercussions of this decision on the stability of the region and the world," an Iraqi government statement said.

"The U.S. administration has to backtrack on this decision to stop any dangerous escalation that would fuel extremism and create conditions favourable to terrorism," it said.

The Iraqi al-Nujaba (a group of Popular Mobilisation Forces) said Trump's decision could become a "legitimate reason" to attack U.S. forces in Iraq.

"Trump's stupid decision to make "Jerusalem" (al-Quds) a capital for the Zionist will be the big spark for removing this entity from the body of the Islamic nation, and a legitimate reason to target American forces," said the group's leader Akram al-Kaabi.

The U.S. has more than 5,000 troops deployed to Iraq.

al-Nujaba, which has about 10,000 fighters, is one of the most important forces in Iraq. 

(File photo: thebaghdadpost)