Australia's support of a UN resolution on Palestine will help to broker peace, the foreign minister says, but a Labor MP argues it will leave Jewish Australians isolated.
Australia overnight joined 142 other nations in passing a vote to upgrade Palestine's rights as a UN observer state.
The United States, Israel and seven others voted against the draft resolution, while 25 nations abstained.
The non-binding resolution recommends the UN Security Council reconsider granting Palestine full membership after the US vetoed a previous effort.
Foreign Minister Penny Wong said the vote did not equate to recognising statehood but Australia no longer believed that recognition could only come at the end of a peace process.
Palestine still needed a governing authority committed to peace and engagement in political processes, she said.
"We all know one vote won't on its own end this conflict - it has spanned our entire lifetimes - but we all have to do what we can to build momentum towards peace," she told reporters in Adelaide on Saturday.
Palestinian statehood would be recognised "when we think the time is right", she said.
"Hamas has no place in the future governance of Gaza," Senator Wong added.
Labor backbencher Josh Burns, who supports a two-state solution, said Australia should have abstained from the vote while Hamas remained in power.
"An abstention would have signalled we're open to further recognition, but that we acknowledge the short-term hurdles that need to be overcome in order to achieve lasting piece," he wrote on Instagram.
"Anti-Semitism is on the rise in Australia and this decision will make Jewish Australians feel even more isolated as they remain gravely concerned for hostages in Gaza."
Former prime minister Scott Morrison used social media to describe the vote as "the most hostile policy act" of any Australian government towards Israel.
Prime Minister Anthony Albanese said he understood the distress felt by Jewish Australians after the October 7 attack on Israel by Hamas, but Palestinians also had the right to live in peace and security.
"Our position was to vote yes ... because we believe it was consistent with our support for a two-state solution," he told reporters in Launceston.
Australia's UN representative James Larsen said the resolution provided a modest extension of Palestine's observer rights while rejecting the goals and methods of Hamas, condemning the October 7 attack and calling for hostage releases.
Opposition foreign affairs spokesman Simon Birmingham said voting in favour of the resolution put Australia out of step with important allies who abstained or rejected it and risked emboldening terrorists.
"Labor's support for the resolution sends a shameful message that violence and terrorism get results ahead of negotiation and diplomacy," he said.
Israel's ambassador to Australia Amir Maimon claimed the vote would empower Iran and Hamas to further destabilise the region.
The Executive Council of Australian Jewry said it was a "sad and shameful" outcome.
"Instead of incentivising the Palestinians to return to negotiations with Israel, such an unearned gain will do the opposite," president Daniel Aghion said.
The UN has failed Palestine repeatedly but the vote was a move towards a serious international commitment to self-determination, Australia Palestine Advocacy Network president Nasser Mashni said.
"Peace and security, for both Palestinians and Israelis, depends upon Israel ending its genocide and its policies of occupation and apartheid," he said.
Saturday's UN vote came amid international condemnation as Israel pushed further into Rafah, Gaza's last refuge where more than one million Palestinians are sheltering following widespread destruction of the strip.
Australia has called for a ceasefire to allow the release of hostages and unimpeded aid to flow into Gaza.
Hamas - designated by Australia as a terrorist group - killed 1200 people and took 250 hostages on October 7, according to Israel's tallies.
Israel has since launched a ground offensive and bombing campaign in Gaza, killing almost 35,000 people and injuring about 77,000 more, according to the Palestinian health ministry.
