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By Steve Holland and Matt Spetalnick

WASHINGTON, Nov 30 (Reuters) - President Donald Trump is considering recognition of Jerusalem as Israel's capital, a move that could upend decades of American policy and ratchet up Middle East tensions, but is expected to again delay his campaign promise to move the U.S. embassy there, U.S. officials said on Thursday.

After months of intense White House deliberations, Trump is likely to make an announcement next week that seeks to strike a balance between domestic political demands and geopolitical pressures over an issue at the heart of the Israeli-Palestinian conflict – the status of Jerusalem, home to sites holy to the Jewish, Muslim and Christian religions.

Trump is weighing a plan under which he would declare Jerusalem the capital of Israel, the officials said, deviating from White House predecessors who have insisted that it is a matter that must be decided in peace negotiations.

The Palestinians want East Jerusalem as the capital of their future state, and the international community does not recognize Israel's claim on the entire city.

Such a move by Trump, which could be carried out through a presidential statement or speech, would anger the Palestinians as well as the broader Arab World and likely undermine the Trump administration's fledgling effort to restart long-stalled Israeli-Palestinian peace talks.

It could, however, help satisfy the pro-Israel, right-wing base that helped him win the presidency and also please the Israeli government, a close U.S. ally.

Trump is likely to continue his predecessors' policy of signing a six-month waiver overriding a 1995 law requiring that the U.S. Embassy be moved from Tel Aviv to Jerusalem, the officials said.

But among the options under consideration is for Trump to order his aides to develop a longer-term plan for the embassy's relocation to make clear his intent to do so eventually, according to one of the officials.

However, the U.S. officials, who spoke on condition of anonymity, cautioned that the plan has yet to be finalized and Trump could still alter parts of it.

"No decision has been made on that matter yet," State Department spokeswoman Heather Nauert said on Thursday.

CAMPAIGN PLEDGE

Trump pledged on the presidential campaign trail last year that he would move the embassy from Tel Aviv to Jerusalem.

But Trump in June waived the requirement, saying he wanted to "maximize the chances" for a peace push led by his son-in-law and senior adviser, Jared Kushner.

Those efforts have made little if any progress.