The prime minister said Israel must also meet other conditions, including agreeing to a ceasefire and allowing the United Nations to restart the supply of aid, or the UK would take the step at September's UN General Assembly.
Criticising the move, Israel said it was"a reward for Hamas".
The government has previously said recognition should come as part of a peace process and at a point when it can have maximum impact.
However, the PM has been under growing pressure - including from his own MPs - to act more quickly.