The document said the plan, which must be prepared in two weeks, will include political, judicial and economic measures.
It added: “The organisation’s secretariat has been tasked with developing a comprehensive action plan that includes measures that can be used to counter the decision of the United States or any other state to recognise Jerusalem as the capital of Israel or to move the embassy to this city.”
Arab League Secretary-General Ahmed Aboul Gheit said the organisation should revise relations with the US, Guatemala and other countries that may recognise Jerusalem as the capital of Israel and move their embassies to the city.
Egyptian Foreign Minister Sameh Shoukry said this week the relocation of the US embassy to Jerusalem and its recognition as the capital of Israel does not change the judicial status of the city and does not abolish the rights of Palestinians to their land.
The relocation of the US embassy was met with riots on the Gaza Strip border which was suppressed by Israeli forces which resulted in over 60 Palestinians dead and over 2,700 others injured.
The clash was the bloodiest day in Gaza since 2014.
Donald Trump said Palestinian group Hamas was entirely to blame for the killings.
His press secretary, Raj Shah said: “The responsibility for these tragic deaths lies squarely with Hamas.
“Israel has the right to defend itself.
“Hamas as an organisation is engaged in cynical action that is leading to these deaths.”
Trump’s decision to move the embassy broke the pre-existing American policy of not opening embassies in contested cities until a peace deal is reached.
Some other Latin American nations could also be considering moving their embassies to the city.
In December 2017, eight other countries voted against a UN resolution telling America to not recognise Jerusalem as the country’s capital.
They included Israel and Honduras.
According to Israel’s ambassador to the UK, some could move “very soon”.
Mark Regev told BBC’s Today Programme he “believes some will very soon,” when asked about the possibility of other nations shifting to Jerusalem.