The resolution was submitted by Algeria, Egypt, Lebanon, Morocco, Oman, Qatar and Sudan. "Israel will not stand silently by in the face of this shameful resolution", Danon said.
The vote was taken on Israel's Independence Day and follows a highly controversial UNESCO resolution passed last October that ignored Jewish ties to the Western Wall and Temple Mount sites.
The Israeli foreign ministry has summoned Swedish ambassador Carl Magnus Nesser and reprimanded him over Stockholm's support of a UNESCO resolution that denounced actions taken by Israel in Jerusalem.
Israel regards all of Jerusalem, including the predominantly Arab east captured and annexed in 1967 as its "indivisible capital" - a claim not recognised internationally.
Israeli officials acknowledged that the resolution was less harsh and easier to stomach than previous drafts, the Times of Israel reported. He also thanked Greece, Great Britain, Germany, Lithuania, the Netherlands, the Ukraine, Paraguay and Togo, who opposed the resolution.
The UK, which is in the process of leaving the European Union, made clear from the beginning that it would not support the move, and Germany - which led the negotiations over the language of the resolution - in the end also voted against.
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Speaking at a Cabinet meeting on Wednesday, Netanyahu said, "UNESCO again accepted an absurd resolution yesterday about the status of Jerusalem", warning that what he called the agency's "systematic harassment has a price".
After the new cut announced by Netanyahu on Wednesday, Israel is set to pay just $2.7 million in membership fees annually.
UNESCO has passed several anti-Israel resolutions regarding Jerusalem's status in the past.
"There is no other people in the world for whom Jerusalem is as holy and important as for the Jewish people", Netanyahu said in a speech at the International Bible Quiz in Jerusalem on Tuesday, Israel's Independence Day. UNESCO, the United Nations Educational, Scientific and Cultural Organization, was established as a non-political body to promote education, science, and culture around the world.
Israel's Ambassador to the UN, Danny Danon, slammed the resolution as an assault on the history of the Jewish people.
Tel Aviv- The Israeli government slammed UNESCO on Wednesday over a resolution on Israeli occupation, considering the United Nations organization's move anti-Semitic and threatening to oust it from its east Jerusalem headquarters in the Armon HaNatziv neighborhood.
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