Following a story by Aljazeera.net and a campaign by Muslim and Arab rights group, Harper Collins agreed on Thursday to take out the offending reference in its Mini Atlas of the World.
Harper Collins, which is owned by pro-Israel media mogul Rupert Murdoch, told the Council for the Advancement of Arab British Understanding (CAABU) it had decided to add a footnote against Jerusalem in the atlas.
The footnote would indicate that Jerusalem is the de facto capital and this is subject to dispute.
The Muslim Public Affairs Committee UK and its 30,000 members also protested to the publishers.
Chris Doyle, CAABU's director, welcomed the publisher's decision.
"Harper Collins publishers are held in very high regard and many of its publications are used in schools and other institutions of education and learning.
"It is therefore essential that its publications are impartial
and accurate. Its decision to footnote Jerusalem is therefore ever more important."
In a letter to Harper Collins last month, Doyle wrote: "Jerusalem is not recognised as Israel's capital by international law... It's status... remains undecided and neither under Israeli nor Palestinian sovereignty.
"Israel might desire Jerusalem as its capital but cannot declare it as such - this is akin to Britain declaring its capital in Paris or Brussels"
"Israel might desire Jerusalem as its capital but cannot declare it as such - this is akin to Britain declaring its capital in Paris or Brussels."
Doyle also raised the issue of describing the Occupied Territories of the West Bank and Gaza as "disputed".
He wrote: "The West Bank and Gaza are defined as occupied territories by international law and by the legal consensus of all nation-states apart from Israel.
"The term 'disputed territories' is purely an Israeli definition and is wholly inaccurate beyond Israeli domestic politics."
However, despite CAABU's protests Harper Collins confirmed it would still use the term "disputed".
Jerusalem is the third holiest site in the world for Muslims, and the scene of the Prophet's night journey to the al-Aqsa mosque.
The overwhelming majority of the international community recognises Tel Aviv as the country's capital.
Only two countries recognise Jerusalem as the capital of Israel - El Salvador and Costa Rica.
Even the United States, Israel's closest ally, refers to Tel Aviv as Israel's capital.