The United States on Sunday welcomed the selection of university chief Rami Hamdallah as next Prime Minister of the Palestinian Authority.

"We congratulate Dr Rami Hamdallah, the next Prime Minister of the Palestinian Authority," Secretary of State John Kerry said in a statement. "His appointment comes at a moment of challenge, which is also an important moment of opportunity."

Hamdallah said he had been asked to form a new government and that he accepted the task, as the term of prime minister Salam Fayyad formally ended.

"President (Mahmud) Abbas has asked me to form a new government and I have accepted," Hamdallah, 54, the president of Al-Najah University in the West Bank city of Nablus, told AFP.

Kerry said that "together, we can choose the path of a negotiated two-state settlement that will allow Palestinians to fulfill their legitimate aspirations, and continue building the institutions of a sovereign and independent Palestinian state that will live in peace, security, and economic strength alongside Israel."

Hamdallah has a doctorate in applied linguistics from the British university of Lancaster. He was born in Anabta, near Tulkarem in the northern West Bank.