Malaysia has come out strongly against the Australian government's move to recognise West Jerusalem as Israel's capital, calling the decision "premature" and a "humiliation to the Palestinians".
But Prime Minister Scott Morrison says it's a decision for Australia, and wants the nation's new position to become an election issue if Labor won't support it.
Mr Morrison confirmed the foreign policy change on Saturday, which Labor has suggested it could reserve if it wins government in 2019.
The prime minister says Opposition Leader Bill Shorten needs to make the case for such a reversal before Australians vote.
"He will have to outline to the Australian community why he would want to now reverse that position and step Australia back from what should be, I think, a very strong stand of support for Israel," he told reporters in Canberra on Tuesday.
A decision on the capital came after the government flouted the idea of moving its Israeli embassy from Tel Aviv to Jerusalem in October, ahead of a crucial by-election in Wentworth.
It drew criticism from political rivals as a cynical ploy to buy votes in the electorate, which has a large Jewish population.
The step also drew rebukes from South East Asian trading partners, who feared Australia wading into the multi-generational political quagmire could fuel unrest.
The government now says it won't move its embassy until a two-state solution is reached, at which time it will also recognise East Jerusalem as Palestine's capital.
But Australia will establish a defence and trade office in Jerusalem and will start looking for an appropriate site for an embassy there.
The Malaysian foreign ministry expressed its strong opposition to the changes in a statement on Sunday.
"This announcement, made before the settlement of a two-state solution, is premature and a humiliation to the Palestinians and their struggle for the right to self-determination," the ministry said.
Labor foreign affairs spokeswoman Penny Wong said the shift in foreign policy was a "unilateral, risky decision".
"It's all risk for no gain," she told reporters in Adelaide on Sunday.
Labor believes Jerusalem should remain recognised as the capital of both Israel and Palestine until the final stages of negotiations on a two-state solution.
Israel's foreign ministry commended the move as a step in the right direction, while Palestinian chief negotiator Saeb Erekat said the announcement was born of Australian "petty domestic politics".
Mr Morrison has defended the new position, saying it was time to call out the "rancid stalemate" in progress towards a two-state solution.
A delayed multi-billion-dollar trade deal with Indonesia is expected to be on shaky ground as a result of the announcement.
Indonesia's foreign ministry spokesman, Arrmanatha Nasir, noted that Australia had not moved its embassy to Jerusalem and called on all members of the United Nations to recognise a Palestinian state "based on the principle of two-state solutions".
Australian Associated Press