The House of Commons debate was being watched around the world after Sweden drew anger from Israel this month for saying it would recognise Palestine.
It was initiated by backbencher Grahame Morris from the main opposition Labour party, who said Britain had a “moral responsibility” to act because of its history as colonial power in the region.
“It’s absolutely clear that Israel-Palestine relations are stuck at an impasse, as is our foreign policy,” Morris said, opening the debate.
“Both of these impasses must be broken. We hear a great deal of talk about the two-state solution but today, through validating both states, members will have the opportunity to translate all of that principled talk into action.”
The vote is non-binding as it was initiated by a backbencher.
Members of the government, which backs a two-state solution, were set to abstain from the vote, Prime Minister David Cameron’s official spokesman said.
“We think that… you should do everything you can that’s supportive of a successful and sustainable outcome based on a two-state solution,” the spokesman told a regular press briefing.
The leaders of Morris’s party, Labour, have said that MPs who are in the Commons when the vote takes place must back it.
However, a number of high-profile figures are reportedly uncomfortable with the motion and will not show up.
Neither Cameron nor Labour leader Ed Miliband was in the Commons chamber for the start of the debate.
Among MPs in the two parties that make up Britain’s coalition government, a small number of Cameron’s Conservatives and many Liberal Democrats — whose party supports Palestinian statehood — are likely to vote in favour.
– ‘Duty to vote for it’ –
The debate follows the collapse of peace talks between Israel and Palestine and this year’s conflict in Gaza in which more than 2,000 Palestinians and dozens of Israelis were killed.
An online petition paving the way for the debate attracted more than 111,000 signatures, Morris said.
Before the debate, a handful of protestors gathered in pouring rain outside the Houses of Parliament, where they had erected a giant banner saying: “Yes Vote for a Palestinian State”.
“If there is a state, the aggression would stop and the healing could begin,” said one of them, Eddie Clarke.
“We feel this parliament has a duty to vote for it.”
The Palestinian Authority estimates that 134 countries have recognised Palestine as a state, although the number is disputed and several recognitions by what are now European Union member states date to the Soviet era.
Britain abstained in 2012 from a vote in the United Nations on giving the Palestinians the rank of observer state, which was granted over the objections of the United States and Israel.
Morris sought to persuade lawmakers that statehood for Palestine through negotiation was not the best way forward.
“To make our recognition of Palestine dependent on Israel’s agreement would be to grant Israel a veto over Palestinian self-determination,” he said.
But Malcolm Rifkind, Conservative foreign secretary between 1995 and 1997, argued that the Palestinians lacked the basic structures needed for a state due in part to political splits between Hamas and Fatah.
“Recognising a state should only happen when the territory in question has got the basic requirements of a state and through no fault of the Palestinians, that is not true at the moment,” he said.
Rifkind warned that voting for the motion could “make ourselves feel important” while exacerbating existing problems.
Lawmakers were expected to vote on the motion at around 2100 GMT. -AFP