Australia will strengthen its objections to the Israeli government's planned settlement expansion and is "gravely concerned" by activities that hinder the prospect of peace in the region.
Foreign Minister Penny Wong responded to questions during a caucus briefing for Labor MPs on Tuesday about planned Israeli government settlements in the West Bank.
The Israeli government's plan to construct thousands of new buildings in the occupied West Bank has faced objections from around the world.
Most countries deem the settlements, built on land captured by Israel in the 1967 Middle East war, illegal.
Their presence is one of the fundamental issues in the Israeli-Palestinian conflict.
Senator Wong said the Australian government was seeking to strengthen its objection to the settlements by affirming they are illegal under international law and a significant obstacle to peace.
"This is consistent with a position of past governments (and) reflects legal advice and United Nations Security Council resolutions, which determined that the settlements have no legal validity and constitute a violation of international law," she told the Senate.
The minister also said she would be returning Australia to the position of previous governments of referring to "Palestinian occupied territories".
This decision matches that of Australia's key diplomatic partners such as the United Kingdom, New Zealand and the European Union.
"In adopting the term, we are clarifying that the West Bank, including East Jerusalem and Gaza, were occupied by Israel following the 1967 war and that the occupation continues," Senator Wong said.
"It reaffirms our commitment to negotiate a two-state solution in which Israel and a future Palestinian state co-exist."
But Liberal foreign affairs spokesman Simon Birmingham accused the government of making a decision based on Labor factions rather than a desire to advance peace.
He said there had not been genuine consultation with those impacted by the change, including the Israeli government, and that the decision raised more questions than answers.
"The coalition remains committed to supporting a lasting two-state solution, in which Israel and Palestine co-exist," Senator Birmingham said.
"It is extremely regrettable that Labor’s internal differences are undermining the consistency of Australia's position on these matters."
Senator Wong said the conflict was not a partisan issue.
"Australia does continue to call out unfair and disproportionate targeting of Israel in international forums," she said.
with Reuters
