Palestinian football chief Jibril Rajoub has withdrawn his association’s bid to have FIFA suspend Israel from international football.
Mr Rajoub said he decided to drop the motion after talking to FIFA’s 209 members who urged unity over discord.
The delegates have gathered for the FIFA congress in Zurich, where the president of the world football governing body will be elected shortly.
Mr Rajoub said: “I am here to play football rather than play politics. I don’t want to score goals, I want to end suffering.”
The Palestinian Football Association, which has been a FIFA member since 1998, had wanted the body to expel Israel over its restrictions on the movement of Palestinian players in the West Bank and Gaza.
Israel has cited security concerns, especially regarding movement in and out of Gaza, which is ruled by the Islamic militant group Hamas.
The Palestinians have also opposed the participation in the Israeli championships of five clubs located in Jewish settlements in the occupied West Bank.
Israel said it was delighted at the move and would work together with the Palestinians in the best interests of world football.
“The result of talks at FIFA is positive and I welcome the fact that we didn’t arrive at an absurd situation in which a state like Israel would have been suspended from a body whose vocation is, before all, sporting,” said Israel’s assistant foreign affairs minister Tzipi Hotovely.
Ahead of the congress meeting, Israel’s Prime Minister Benjamin Netanyahu weighed in on the debate – saying the dispute “stems from their very objection to our existence”.
He added: “If FIFA harms Israel, it will be harming itself. Other countries, too, will use FIFA to settle scores with their adversaries, and instead of the spirit of international sport that is supposed to transcend politics, we will get the destruction of soccer.”