Foreign Minister Julie Bishop appears to have cooled the temperature on the East Jerusalem row with Arab countries by reaffirming Australia's backing for the UN resolution that calls the territory "occupied".
After meeting with Ms Bishop on Thursday, Arab and Muslim nation envoys cautiously welcomed what they regarded as the government's softened stance on the issue.
Ms Bishop pointedly told the ambassadors that she and Prime Minister Tony Abbott alone spoke for the government on foreign affairs - an apparent reference to the fact that the issue flared after Attorney-General George Brandis refused to call East Jerusalem "occupied".
But the government still faces potential blowback over the row, with 57 countries of the Organisation of Islamic Co-operation due to meet in the Saudi Arabian city of Jeddah overnight and expected to discuss possible trade sanctions against Australia.
Ms Bishop released a letter she had written to the Arab and Muslim ambassadors clarifying that Australia had not changed its position on the legal status of East Jerusalem, which was part of the territory seized by Israel during the Six Day War of 1967.
Australia's position, she said, was "consistent with UN resolutions on this issue".
The key resolution 242, passed by the UN in 1967, calls for the "withdrawal of Israel armed forces from territories occupied in the recent conflict".
A statement made by Senator Brandis to a Senate hearing two weeks ago branded the term "Occupied East Jerusalem" as "freighted with pejorative implications".
But Ms Bishop said in her letter that Senator Brandis' statement was "about nomenclature" only.
Izzat Abdulhadi, head of the delegation that represents diplomatically the Palestinian Authority in Australia, said he took this as an olive branch.
"She softened the language today," he said.
"She also said that any kind of policy change should be issued or declared by herself or the Prime Minister only from now."
He warned, however, that Arab countries would still be watching closely the government's future actions, as the East Jerusalem row was part of a pattern that started with Ms Bishop's stated doubts about the illegality of settlements in the occupied territories and Australia's reversed position on a key UN vote.
Mr Abdulhadi said the Jeddah meeting could still decide to urge individual countries to slap trade sanctions on Australia, which could put billions of dollars of agricultural imports, such as wheat and beef, at stake.
Jordanian ambassador Rima Ahmad Alaadeen and Iraqi Ambassador Mouayed Saleh also made placatory remarks.
Labor foreign affairs spokeswoman Tanya Plibersek said the government had nevertheless damaged Australia's standing by tying itself "up in knots" over Senator Brandis' "freelancing on foreign policy".
"All this is doing is embarrassing Australia on the international stage and putting billions of dollars of our farmers' exports at risk," she said.