Prime Minister Julia Gillard has been forced to withdraw Australia's support for Israel in an upcoming United Nations vote after being opposed by the vast majority of her cabinet and warned she would be rolled by the caucus.
As a result, Australia will abstain from a vote in the UN General Assembly on a resolution to give Palestine observer status in the UN, rather than join the US and Israel in voting against the resolution as Ms Gillard had wanted.
Ms Gillard was opposed by all but two of her cabinet ministers - Bill Shorten and Stephen Conroy, both of the Victorian Right - during a heated meeting on Monday night.
She was then warned by factional bosses she faced a defeat by her own backbench when the caucus met on Tuesday morning.
Minister for Foreign Affairs Bob Carr, who met Ms Gillard before cabinet, drove the push to oppose the Prime Minister.
Former Labor foreign affairs minister Gareth Evans briefed Labor MPs on Monday, warning they would be on the wrong side of history if they stood with the US and Israel against the rest of the world.
The Left faction, which is pro-Palestinian, wanted to vote for the resolution. The Right faction, which would usually support Ms Gillard, backed an abstention, in part due to the views of its members that the government was too pro-Israel and also because many MPs in western Sydney, who are already fearful of losing their seats, are coming under pressure from constituents with a Middle East background.
Senior sources told Fairfax Media that, in cabinet on Monday night, at least 10 ministers, regardless of factional allegiance and regardless of whether they were Kevin Rudd or Gillard supporters, implored Ms Gillard to change her view.
After the meeting, Ms Gillard received separate delegations from the Left and the Right factions.
There was to be a motion put to the caucus by ACT backbencher Andrew Leigh, calling for Australia to back Palestine in the UN vote.
The Left was going to support it. Normally, the Right would have voted against it and defeated it. But the Right conveners, including Joel Fitzgibbon, are understood to have told Ms Gillard the Right was not going to bind its members on the vote and she would lose heavily with the NSW Right and people from others states to support the motion.
''She had no choice after that,'' said one MP.
Ms Gillard told the caucus meeting that her personal view was to vote no because she believed the UN vote, which will pass easily with the overwhelming support of UN member states, would hurt the peace process.
The Israeli government is understood to be furious. Opposition foreign affairs spokeswoman Julia Bishop said the decision to abstain was disappointing because the Coalition backed a no vote.