NEW YORK (Reuters) - U.S. President Joe Biden’s administration supports a two-state solution between Israel and the Palestinians and will overturn several Trump administration decisions, the acting U.S. envoy to the United Nations assured the Security Council on Tuesday. The Palestinians want a state in the West Bank and Gaza Strip with east Jerusalem as its capital, all territory captured by Israel in 1967. However, under a failed peace proposal by former President Donald Trump, Washington would have recognized Jewish settlements in occupied territory as part of Israel. Acting U.S. envoy to the U.N., Richard Mills, told the Security Council Washington would urge Israel and the Palestinians “to avoid unilateral steps that make a two-state solution more difficult, such as annexation of territory, settlement activity, demolition, incitement to violence and providing compensation for individuals imprisoned for acts of terrorism”. “We hope it will be possible to start working to slowly build competence on both sides to create an environment in which we might once again be able to help advance a solution,” Mills told the 15-member body. He said the Biden administration intended to restore Palestinian aid and take steps to re-open the Palestinian diplomatic mission in Washington. Under Trump, Washington cut some $360 million in annual funding for the U.N. agency supporting Palestinian refugees (UNRWA). “We do not do these steps as a favor to the Palestinian leadership,” Mills said. “U.S. assistance benefits millions of ordinary Palestinians and helps to preserve a stable environment that benefits both Palestinians and Israelis.” He added that Washington steadfastly supported its ally Israel and would continue to push back against any bias toward the country at the United Nations or other international bodies. The Biden administration would continue to urge other countries to normalize ties with Israel, while recognizing it was “not substitute for Israeli-Palestinian peace”, Mills said. In what is widely seen as one of Trump’s few foreign policy successes, Washington secured agreements late last year by four Arab states - the United Arab Emirates, Bahrain, Sudan and Morocco - to start normalizing relations with Israel.