Britain has joined 13 other members of the United Nations Security Council in backing a resolution, vetoed by the US, which rejected the recognition of Jerusalem as the capital of Israel.
The vote, in which the two close allies unusually lined up on opposing sides, amounted to a demonstration of global concern at President Donald Trump's decision to move the US embassy to the holy city.
Meanwhile, Prime Minister Theresa May personally restated her disagreement with Mr Trump's decision in a telephone call with Turkish President Recep Tayyip Erdogan.
Mr Trump sparked protests across the region by breaking from decades of US neutrality in the Middle East peace process on December 6 to announce he recognised Jerusalem as Israel's capital and would move the US embassy from Tel Aviv.
Mrs May moved quickly at the time to say she regarded the decision as "unhelpful for prospects for peace in the region" and to restate Britain's position that the status of Jerusalem - claimed as capital by Israelis and Palestinians - should be settled as part of a negotiated settlement.
Speaking after Monday's vote in New York, Britain's UN ambassador Matthew Rycroft said: "The status of Jerusalem should be determined through a negotiated settlement between the Israelis and the Palestinians, and should ultimately be the shared capital of the Israeli and Palestinian states."
The vetoed resolution would have demanded that all countries comply with earlier Security Council decisions on Jerusalem, dating back to 1967, requiring the city's final status to be decided in direct negotiations between Israel and the Palestinians.
Any decisions by a UN member state which purport to alter the status of the city "have no legal effect, are null and void and must be rescinded", said the resolution, tabled by Egypt.
There was never any question of the US opting not to exercise its veto on a resolution which would have had the effect of forcing Mr Trump to reverse his decision.
US ambassador Nikki Haley called it "an insult" and said she wielded the veto "in defence of American sovereignty and in defence of America's role in the Middle East peace process".
Palestinians immediately said they would seek a similar resolution in the 193-member UN General Assembly, where there are no vetoes but decisions are not legally binding.
Turkey has been at the forefront of global criticism of the US move, hosting a conference of Muslim nations which denounced it as an "unlawful decision that might trigger chaos in the region".
In her phone call with Mr Erdogan, Mrs May repeated her disagreement with Mr Trump's decision and restated the UK's position that Jerusalem should ultimately form a shared capital between the Israeli and Palestinian states.
She also stressed the importance of continuing to work with the US to encourage them to bring forward proposals that will re-energise the peace process, said Downing Street.
The two premiers also discussed the "significant strengthening" of ties between the UK and Turkey following Mrs May's visit to the country in January, featuring the signing of a £100 million defence deal, as well as Turkish prime minister Binali Yildirim's trip to Britain last month.