Mahmoud Abbas, the Palestinian president, has officially renamed the area he controls.
He has called for all official documents - including passports, drivers' licenses, postage stamps and car number plates - to now bear the name 'State of Palestine', instead of the generally used 'Palestinian National Authority',
Abbas has also ordered foreign ministries and embassies around the world to start using the title.
"Palestine is a country under occupation. What was Norway, Finland, Holland, France, Korea, Philippines between 1939 and 1945 - nation states under occupation. Today, the state of Palestine is officially a state under occupation. It has 192 member countries that recognise this and a nation state, Israel, which is the occupying power; these are the new realities."
- Saeb Erekat, the chief Palestinian negotiator
The move follows the UN general assembly's recognition of Palestine as a state.
Abbas said that this latest presidential decree was aimed at enhancing "sovereignty on the ground" and was a step towards "real independence".
There have been a number of important developments for Palestinians in recent months.
In November, after a week-long conflict in Gaza, Israel and Hamas agreed to a ceasefire.
Later that month, despite Israeli and US opposition, the Palestinian Authority was upgraded to a non-member Observer State by the UN general assembly.
Encouraged by this success, Fatah allowed Hamas to hold anniversary rallies in the West Bank.
Two weeks later, Israel eased the blockade it imposed on Gaza when Hamas took control in 2007.
"Israel won't be happy about it because anything that undermines the peace process, any unilateral act, is not helpful. We have very serious and difficult issues that we face and that the Palestinians have to face that will have to be settled with negotiations."
- Robbie Sabel, a former adviser to Israel's foreign ministry
And on Friday, Hamas allowed a large Fatah rally in Gaza, signalling a possible end to the five year rift between the two sides.
Meanwhile, there has been no official word from Israel on the decision to adopt the name 'State of Palestine', but it is an announcement bound to anger.
So, is the move itself a passport to a new reality for the Palestinians or merely a symbolic gesture?
To discuss this, Inside Story, with presenter Shiulie Ghosh, is joined by guests: Saeb Erekat, the chief Palestinian negotiator; Robbie Sabel, a former legal adviser to Israel's foreign ministry; and Rosemary Hollis, a professor of Middle East Policy Studies at City University London.
THE 'STATE OF PALESTINE'
- Mahmoud Abbas wants passports and ID cards to say 'State of Palestine'
- Until now official documents have said 'Palestinian Authority'
- 'State of Palestine' is to be used on passports, documents and stamps
- Palestinian ambassadors abroad have been told to act as envoys of state
- The United Nations voted to change Palestinian status in November
- The UN changed Palestinian status from non-member observer entity to state
- Most members of the UN general assembly voted in favour of the upgrade
- The assembly voted 138-9 in favour with 41 nations abstaining
- Palestinians say the upgrade will strengthen their position to negotiate
- Israel criticised the upgrade for bypassing peace negotiations