The South American nation thus joins a wave of other regional countries that include Brazil, Argentina, Bolivia, Chile, Ecuador, Peru, Guyana and Uruguay.
"The Republic of Paraguay expressly reiterates the recognition of this state as free and independent with the borders of June 4, 1967," the Foreign Ministry said in a statement.
With this measure, Paraguay "reaffirms its conviction that negotiations between Israel and Palestine should re-start with the goal of reaching peace and security for both nations."
Palestinian President Mahmoud Abbas and his foreign minister, Riad Malki, welcomed Paraguay's decision. The two issued a joint statement stressing the special relations between Paraguay and the Palestinian Authority.
US-backed Israeli-Palestinian peace talks last collapsed in September 2010 when a limited moratorium on Israeli settlement construction in the territories expired.
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