The Liberals are doubling down on recognising West Jerusalem as Israel's capital following a UN vote on Palestinian membership, cementing a major shift in the main parties' position on the region.
Australia voted "yes" to a UN General Assembly motion giving Palestine more rights in the organisation - in which it is a non-member observer state - including being able to make statements and submit proposals and amendments.
There were 143 votes in favour, nine against and 25 abstentions.
The vote did not grant full membership but recommended the UN Security Council "reconsider the matter favourably" after the US recently used its veto power to stop Palestine becoming a full member.
The General Assembly motion did not recognise Palestine as a state.
But Australia's position has been criticised by the opposition, who argue the federal government should have voted "no" alongside partners like Israel and the US.
Labor and the Liberals remain committed to a two-state solution - where Palestine and Israel exist side-by-side within internationally recognised borders - but there is another rift about the pathway in light of the UN vote.
The Liberals if elected would again recognise West Jerusalem, as it is where Israel's government is located and there has been no proposal to change this, opposition foreign affairs spokesman Simon Birmingham said.
"We would consult with, of course, the Israeli government and other stakeholders, but our principal position there hasn't changed," he told AAP.
But recognition of a Palestinian state hinged on a negotiated outcome, including answering questions about borders and governance, Senator Birmingham argued, saying the government had put the cart before the horse.
Then-Liberal prime minister Scott Morrison recognised West Jerusalem as the capital of Israel instead of Tel Aviv in 2018 but the move was reversed by the Albanese Labor government, which branded it a cynical political play to win votes.
The determination of Jerusalem as a capital city was to be resolved through peace negotiations, Labor said when justifying its decision to keep the embassy in Tel Aviv in October 2022.
Foreign Minister Penny Wong said Australia had not recognised a Palestinian state in its support of the UN vote, but this move couldn't be left to the end of a peace process.
Allies including the US are reviewing potential options for recognition ahead of a negotiated peace settlement between Palestine and Israel in light of the war in Gaza.
But moving ahead with granting Palestine more rights or down any pathway to statehood would be seen as rewarding terrorism, Israel and its supporters argued.
Senator Wong rejected arguments that the move rewarded terrorism, as a two-state solution undermined Hamas by providing peace and stability.
Hamas - designated by Australia as a terrorist group - killed 1200 people and took 250 hostages on October 7, according to Israel's tallies.
Israel has since launched a ground offensive and bombing campaign in Gaza, killing almost 35,000 people and injuring about 77,000 more, according to the Palestinian health ministry.
The status of Jerusalem as a capital for an Israeli and Palestinian state is one of the main stumbling blocks for a two-state solution to the decades-old conflict.
