Labor is facing calls for the recognition of Palestine to become a priority for the government, with a commitment to statehood already in the party's policy platform.
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No timeline has been attached to implement the policy, with some pro-Palestinian Labor delegates pushing to have it expedited.
But pro-Israel elements of the party threatened to try and strip the policy from the platform if the other side attempted to alter it at the national conference in Brisbane.
No amendments were moved and the same wording remains in the policy platform with no timeline attached.
Labor MP Susan Templeman spoke in favour of recognition at Labor's national conference on Friday, saying the actions of Israel's extreme right-wing government were "deeply concerning".
"The extreme right-wing policies of the Netanyahu government that speed up the expansion of settlements are a serious impediment to the two-state solution that we are all committed to," she told Labor's national conference on Friday.
She said she supported "the call our platform makes for the recognition of Palestine as an issue of priority" as Palestinians suffered inequality at the hands of Israeli settlements.
Trade unionist Michael Easson said good people could disagree on the issue and called for a nuanced approach to an age-old conflict.
He told the conference there could be "no justice without truth".
"The central and tragic truth of the Israel-Palestine conflict is that two people - the Jewish people and the Palestinian - have deep, centuries-long, historical ties to a territory no larger than half of Tasmania," he said.
"Viewing the conflict from a one-eyed perspective will not achieve peace, any lasting solution cannot be at the expense of Palestinians or Israelis."
The Executive Council of Australian Jewry welcomed the decision to not change the policy platform or add "further hostile policy pronouncements".
It said Palestine did not exist as a state and any recognition would impact peace negotiations.
"The truth that this government must accept is that recognition of a state that does not exist is not the expression of solidarity or of a desire for peace," they said in a statement.
"Recognition of a Palestinian state can only occur when it actually exists and that will only happen through direct negotiations between the parties."
It comes after Foreign Minister Penny Wong strengthened Australia's objection to Israeli settlements in the occupied West Bank and expressed concerns about what they would mean for peace in the region.
Senator Wong led Labor's foreign policy debate on Friday but the only contentious push the government faced on the conference floor was around its commitment to nuclear submarines and the AUKUS agreement.
Its position was ultimately reaffirmed by delegates.
The foreign policy session was largely rubber-stamped by rank-and-file members who also voted in favour of the reunification of Ireland and reaffirmed support for Ukraine against Russian aggression.
Resolutions also called out human rights abuses in Iran and China.
Labor will also review whether Australia's two territories should have more representation in parliament.
The three-day national conference continues until Saturday.
Australian Associated Press
