TEGUCIGALPA, Aug 26 (Reuters) - Honduras on Friday recognized Palestine as an independent state amid a drive by the Arab League to upgrade it to full membership status in the United Nations.

Honduras took the decision even though it threatened the country's relationship with long-standing ally Israel.

Israel's ambassador in Honduras, Eliahu Lopez, said the move was a blow to the heart of Israel.

Honduras' foreign ministry said in a statement that it has supported and continues to support the full rights of the State of Israel to exist within safe borders that are recognized by the international community.

Neighboring El Salvador on Thursday also said it now recognized Palestine as an independent state.

About 120 countries have recognized the state of Palestine to date.

The Palestinians, who currently have U.N. observer status, had previously pledged to seek U.N. endorsement in September for their claim of sovereignty in the Gaza Strip, and the Israeli-occupied West Bank and East Jerusalem.

The move has gained momentum with the lack of progress in Israeli-Palestinian peace negotiations. The Arab League formally backed this plan in May.

Full member status would require approval in the U.N. Security Council, where Israel's ally the United States has said it will veto any such resolution.

(Reporting by Gustavo Palencia; Editing by Paul Simao)