Israel has demanded answers from Australia after the government reversed a controversial decision to label Jerusalem as the country's capital.
Foreign Minister Penny Wong on Tuesday confirmed Labor would walk back former prime minister Scott Morrison's decision to recognise West Jerusalem as the Israeli capital.
Senator Wong described Mr Morrison's decision, made during the 2018 Wentworth by-election campaign, as a "cynical" ploy to woo the seat's large Jewish population, which had put the possibility of a two-state solution in jeopardy.
The Israeli Foreign Ministry reacted by summoning Australia's ambassador to explain the decision on Tuesday afternoon. Both the Israelis and Palestinians claim Jerusalem as their capital.
Speaking to journalists in Canberra after days of speculation, Senator Wong said the final location of Israel's capital would be determined via peace negotiations with the Palestinian people.
She made the announcement just days after references to Jerusalem as Israel's capital were quietly removed from the Department of Foreign Affairs and Trade's website, as revealed by The Guardian.
"The Australian government remains committed to a two-state solution, in which Israel and a future Palestinian state can coexist in peace and security within internationally recognised borders," Senator Wong said.
"We will not support an approach that undermines this prospect."
Senator Wong did not say whether Israeli diplomats had demanded representations earlier this week, but insisted Australia would always remain a "steadfast friend" of the country.
"We will not waver in our support of both Israel and the Jewish community in Australia," she said.
"We are equally unwavering in our support of the Palestinian people, including in the provision of humanitarian support."
The General Delegation of Palestine to Australia welcomed the decision, describing Israel's annexation of East Jerusalem in 1980 as a "flagrant violation" of international law and urging Australia to recognise the state of Palestine "without further delay".
"The reversal of the Morrison government's recognition of West Jerusalem as the capital of Israel is a step in the right direction towards the effective implementation of the two-state solution, and achieving a just and durable peace in the Middle East," it said in a statement.
But Israel's Prime Minister Yair Lapid criticised the decision, describing Jerusalem as the "eternal undivided capital of Israel".
"In light of the way this decision was made in Australia, as a hasty response to an incorrect report in the media, we can only hope that the Australian government manages other matters more seriously and professionally," he said in a statement.
Mr Morrison announced Australia would formally recognise West Jerusalem as Israel's capital during a 2018 by-election in the Sydney seat of Wentworth, home to a large Jewish population, with his government's majority teetering on the brink.
Australian governments had previously considered Tel Aviv to be Israel's capital, and its embassy remained in the city.
Speaking to Sky News on Tuesday afternoon, Dave Sharma, the Liberal byelection candidate and former ambassador to Israel, flatly denied Mr Morrison's intervention was a purely political decision.
"We stuck with it, and reaffirmed on a number of occasions since, [that] that was our policy," he said.
A spokeswoman for Mr Morrison told AAP the decision was disappointing.
"[It] represents a further diminution in Australia's support for the state of Israel by the Labor government from the high water mark established by the Morrison government," they said.
Mr Sharma, who lost the byelection but went on to win Wentworth just months later, said Senator Wong's decision "flies in the face of the facts on the ground", with Israel's parliament located in West Jerusalem.
Mr Sharma accused the Foreign Minister of failing to explain how the reversal was in Australia's national interest.
"She's reacting against the decision that the Morison government took, but she hasn't articulated why the Labor government is taking this decision. I think it requires an explanation," he said.
Mr Sharma insisted Mr Morrison's decision did not preclude the prospect of a future Palestinian state also hosting its capital in Jerusalem.
"Israel, of course, would maintain its presence in Jerusalem [under a two-state solution] and no one thinks that would be [anything] other than the case," he said.
"[That] is why this decision ... is so strange, unusual, and without foundation."
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