All Palestinian stamps, including those on passports, ID cards, driving licenses, official letterheads and other documents will be changed to bear the new name, according to official Palestinian news agency Wafa.
The move marked the first step the Palestinians have taken towards statehood following a U.N. vote in November that accorded Palestine a non-member observer state status.
Abbas said the move would help bolster the Palestinian state "on the ground and build its institutions... and its sovereignty over the its land,” according to a report published Sunday by Wafa.
Israel has not responded to the move.
Last week, Abbas ordered the foreign ministry and embassies to start using "State of Palestine" in official correspondence, the AFP reported.
With Israel’s general elections two weeks away, Prime Minister Benjamin Netanyahu Sunday reiterated his policy towards Palestinian statehood as stated in a landmark speech he delivered shortly after taking office in 2009.
For the first time, Netanyahu said that he would agree to a Palestinian state under certain conditions.
The last Likud party platform, written before the previous elections, states that the party will be "prepared for real concessions in return for a real and credible peace" without mentioning the phrase "Palestinian state,” according to a report on the Los Angeles Times.
Netanyahu said the principles of the 2009 speech still applied, but there would be no party platform.
"We are not publishing a platform; we are continuing the same course we have taken these past four years," he told Israel Radio.
To reach a resolution, he said, the Palestinians should recognize Israel as a Jewish state and agree to declare an end to the conflict and to demilitarize resolved territories. "These are not preconditions for opening negotiations; these are the conditions for concluding them," he said.
Hamas, which does not recognize Israel and is officially committed to its destruction, has gained new support among the Palestinians following the eight days of fighting with Israel in November.
On the other hand, Abbas's Fatah, which says it is committed to a two-state solution, enjoys the Western support.