Israel has approved in principle a new community named after US President Donald Trump on a contested frontier zone with Syria.

The "Trump Heights" project is intended to cement ties after Mr Trump broke with other world powers to recognise Israeli sovereignty over the plateau in March.

At a special cabinet session in Beruchim just 12km from the Golan Heights armistice line with Syria, Mr Netanyahu unveiled a sign labelled "Trump Heights" in English and Hebrew.

The sign was decorated with the Israeli and US flags and planted on a patch of synthetic grass.

Israel captured the Golan from Syria in a 1967 war and later annexed and settled it - moves not accepted by most world powers, who deem it to be occupied Syrian territory.

Ongoing hostilities between Israel and Syria, and internal Syrian fighting that drew Iranian-backed auxiliaries to back Damascus and deploy near the Golan, helped Mr Netanyahu make his case for Mr Trump to recognise the Israeli claim of sovereignty.

Mr Trump similarly delighted Israelis by recognising Jerusalem as their capital and withdrawing from the 2015 Iran nuclear deal.

"Trump is a great friend of Israel," Mr Netanyahu said.

"He has torn the mask off this hypocrisy which doesn't recognise the obvious."

"Thank you PM @Netanyahu and the State of Israel for this great honor!" Mr Trump said on Twitter.

Israeli authorities hope a revamping of Beruchim, home to an ageing immigrant community from the former Soviet Union, to "Trump Heights" might bring an influx of residents, and Mr Netanyahu called the day historic.

But a 12 June memorandum from his office showed the plan was far from implementation.

It lacks earmarked funds, as well as final approval for its precise location and name.

"In this (cabinet) resolution, it is proposed that the name of the community, if it is founded, be 'Trump Heights'," said the memorandum, signed by a deputy legal counsellor, Yael Cohen.

The hesitancy was in part due to the fact that Mr Netanyahu heads a caretaker government, having failed to form a coalition after an inconclusive national election in April.

The conservative four-term premier must now contest a 17 September re-run vote.

Mr Netanyahu's centre-left rivals ridiculed yesterday’s ceremony.

"Whoever reads the small print on the 'historic' resolution understands that it is a dummy-resolution," tweeted Zvi Hauser, an ex-Netanyahu cabinet secretary now with an opposition party.

The political upheaval appears to have put a spanner in the works of a long-awaited US proposal for Israeli-Palestinian peace.

Trump advisers had predicted the plan would be made public this month, but officials now say that is unlikely to happen until after the September election.

Sara Netanyahu convicted of misusing public funds

Separately, Mr Netanyahu's wife has been convicted of fraudulently using state funds for meals, under a plea bargain that dropped more severe charges.

In the deal approved by judge Avital Chen at Jerusalem magistrates' court, Sara Netanyahu was found guilty of using the errors of government accounting staff to bypass spending restrictions.

She was fined 10,000 shekels (€2,470) and ordered to reimburse the state a further 45,000 shekels (€11,000).

Although her husband is a millionaire she asked for payment to be deferred and the judge allowed her to pay in monthly installments beginning in September.

The 60-year-old, a high-profile presence at her husband's side throughout his long tenure in office, was initially charged in June 2018 with fraud and breach of trust for paying €85,000 for meals from well-known Jerusalem businesses.

She had done so while falsely declaring there was no cook available at the premier's official residence.

The amended indictment, approved yesterday, dropped the graft charges, replacing them with "obtaining a benefit by deliberately exploiting the mistake of another person". 

Mr Netanyahu dubbed the case "surrealist" in a video posted online.

"I am telling you, if this wasn't a matter concerning my wife, there would never have been an investigation," the prime minister said.