Australia reverses recognition of Jerusalem as Israeli capital

Australia said it would no longer recognise West Jerusalem as Israel's capital, reversing a contentious decision by the previous conservative government.

Foreign Minister Penny Wong said the city's status should be decided through peace talks between Israelis and Palestinians, and not through unilateral decisions.

"We will not support an approach that undermines" a two-state solution, she said, adding: "Australia's embassy has always been, and remains, in Tel Aviv".

In 2018 a conservative government led by Scott Morrison followed former US president Donald Trump's lead in naming West Jerusalem as the Israeli capital.

The move caused a domestic backlash in Australia and caused friction with neighbouring Indonesia -- the world's most populous Muslim-majority nation -- temporarily derailing a free trade deal.

Jerusalem is claimed by both Israelis and Palestinians, and most foreign governments avoid formally declaring it the capital of any state.

"I know this has caused conflict and distress in part of the Australian community, and today the government seeks to resolve that," Wong said.

She accused the Morrison government of being motivated by a by-election in a beach-side Sydney suburb with a sizable Jewish community.

Wong insisted that the decision did not signal any hostility to Israel.

"Australia will always be a steadfast friend of Israel. We were amongst the first countries to formally recognise Israel," she said.