Australia has reversed a decision made four years ago to recognise West Jerusalem as the capital of Israel.
Canberra’s decision in 2018 had undermined peace and put Australia out of step with other nations, Foreign Minister Penny Wong said.
She stressed that Australia remained a “steadfast friend” to Israel. Its embassy will stay in Tel Aviv.
The status of Jerusalem is one of the most contested issues between Israel and the Palestinians.
Israel Prime Minister Yair Lapid said: “In light of the way in which 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.
“Jerusalem is the eternal and united capital of Israel and nothing will ever change that.”
Former US President Donald Trump drew international criticism in 2017 when he reversed decades of American foreign policy by recognising the ancient city as Israel’s capital. The US embassy was relocated from Tel Aviv to Jerusalem in May 2018.
Months later, Australia’s then Prime Minister Scott Morrison announced his government would follow suit.
At the time, Mr Morrison said Australia would recognise West Jerusalem immediately but not move its embassy from Tel Aviv until a peace settlement was achieved.
Mr Morrison’s government lost power in an election in May this year.
On Tuesday, Foreign Minister Penny Wong called the former government’s decision a “cynical play” to win over Jewish voters ahead of an election in Australia.
“I regret that Mr Morrison’s decision to play politics resulted in Australia’s shifting position, and the distress these shifts have caused to many people in the Australian community who care deeply about this issue,” she said.
She reaffirmed the country’s “previous and longstanding” position that the status of Jerusalem should be resolved as part of peace negotiations between Israel and the Palestinian people.
The UK is currently considering moving its embassy to Jerusalem. Honduras, Guatemala and Kosovo are the only places other than the US with embassies in the city.
While Israel regards Jerusalem as its “eternal and undivided” capital, the Palestinians claim East Jerusalem – occupied by Israel in the 1967 Middle East war – as the capital of a future state.
The status of Jerusalem goes to the heart of the Israeli-Palestinian conflict.
Israeli sovereignty over Jerusalem has never been recognised internationally, and according to the 1993 Israel-Palestinian peace accords, the final status of Jerusalem is meant to be discussed in the latter stages of peace talks.