(Adds Trump tweet)
By Rami Amichay
BERUCHIM, Golan Heights, June 16 (Reuters) - Israel approved in principle on Sunday a new community named after U.S. President Donald Trump on a contested frontier zone with Syria - but construction looked likely to lag given Prime Minister Benjamin Netanyahu's political stumbles.
The "Trump Heights" project is intended to cement ties after Trump broke with other world powers to recognise Israeli sovereignty over the plateau in March.
At a special cabinet session in Beruchim, a sparse clutch of homes just 12 km (7.5 miles) from the Golan Heights armistice line with Syria, Netanyahu unveiled a sign labelled "Trump Heights" in English and Hebrew.
The sign was decorated with the Israeli and U.S. flags and planted on a patch of synthetic grass.
Israel captured the Golan from Syria in a 1967 war and later annexed and settled it - moves not accepted by most world powers, who deem it to be occupied Syrian territory.
Ongoing hostilities between Israel and Syria, and internal Syrian fighting that drew Iranian-backed auxiliaries to back Damascus and deploy near the Golan, helped Netanyahu make his case for Trump to recognise the Israeli claim of sovereignty.
Trump similarly delighted Israelis - while appalling other world powers - by recognising Jerusalem as their capital and withdrawing from the 2015 Iran nuclear deal.
"Trump is a great friend of Israel," Netanyahu said.
"He has torn the mask off this hypocrisy which doesn't recognise the obvious."
"Thank you PM @Netanyahu and the State of Israel for this great honor!" Trump said on Twitter.
Israeli authorities hope a revamping of Beruchim, home to an ageing immigrant community from the former Soviet Union, to "Trump Heights" might bring an influx of residents, and Netanyahu called the day historic.
But a June 12 memorandum from his office showed the plan was far from implementation: it lacks earmarked funds as well as final approval for its precise location and name.
"In this (cabinet) resolution, it is proposed that the name of the community, if it is founded, be 'Trump Heights'," said the memorandum, signed by a deputy legal counsellor, Yael Cohen.
The hesitancy was in part due to the fact that Netanyahu heads a caretaker government, having failed to form a coalition after an inconclusive national election in April. The conservative four-term premier must now contest a Sept. 17 re-run vote.
Netanyahu's centre-left rivals ridiculed Sunday's ceremony.
"Whoever reads the small print on the 'historic' resolution understands that it is a dummy-resolution," tweeted Zvi Hauser, an ex-Netanyahu cabinet secretary now with an opposition party.
The political upheaval appears to have put a spanner in the works of a long-awaited U.S. proposal for Israeli-Palestinian peace.
Trump advisers had predicted the plan would be made public this month, but officials now say that is unlikely to happen until after the September election. (Writing by Dan Williams; Editing by Andrew Cawthorne)