Israel has reportedly summoned the Australian ambassador and chastised him over the Albanese government’s decision not to recognise West Jerusalem as the capital.

The Sydney Morning Herald reports Israel’s Foreign Ministry political director Aliza Bin-Noun met Australia’s ambassador Paul Griffiths for more than half an hour on Tuesday.

Ms Bin-Noun labelled Australia’s move to drop its official recognition as a “wretched decision” which might encourage extremists and ignite more agitation in the region, the SMH reports.

In a statement from the ministry, Ms Bin-Noun said Israel would consider its next steps.

She called the change in government policy “a wretched decision that ignores the deep and eternal connection between Israel and its historic capital and that goes against the good relations between Israel and Australia”.

She also objected that the decision came during Sukkot and Simhat Torah, when the Jewish people celebrate their special connection to Jerusalem, writes the SMH.

Both Israel and Palestine claim Jerusalem as their capital.

Former prime minister Scott Morrison recognised West Jerusalem as Israel’s capital in 2018, and said Australia would move its embassy there from Tel Aviv.

On Tuesday, Foreign Minister Penny Wong said the conflict between Israel and Palestine should be resolved through peace negotiations between the two.

Palestinian diplomats in Australia welcomed the announcement, saying the initial decision was “a flagrant violation of international law”.

“The reversal … is a step in the right direction towards the effective implementation of the two-state solution and achieving a just and durable peace in the Middle East,” the delegation to Australia said.

They have also asked the Australian government to recognise Palestine as a state “without further delay to save the two-state solution”.

Aliza Bin-Noun reportedly chastised Australia’s ambassador to Israel Paul Griffiths. Photo: Getty

However, Israel’s Prime Minister Yair Lapid expressed disappointment in the decision.

“Jerusalem is the eternal undivided capital of Israel and nothing will change that,” Mr Lapid said in a statement.

The Executive Council of Australian Jewry attacked the government and branded the reversal as “a gratuitous insult to a key economic and strategic ally”.

“This decision panders to the most extreme elements of the Labor Party and will also serve as a disincentive for the Palestinians to return to negotiations,” it said in a statement.

“The arguments advanced by opponents of recognition of West Jerusalem as Israel’s capital, namely that it would ignite unrest in the Arab world, were shown to be manipulative and inaccurate.”

Senator Wong said Jerusalem remained a final-status issue, meaning its status was subject to the peace negotiations.

She described the move by Mr Morrison as purely political to win a byelection in a seat with a high Jewish population (Wentworth) and said it was out of step with the majority of the international community.

She said Australia’s embassy “has always been, and remains, in Tel Aviv”.

Senator Wong reaffirmed Australia’s support for the Israeli community and the Palestinian people.

“I regret that Mr Morrison’s decision to play politics resulted in Australia’s shifting position and the distress these shifts have caused,” she said, expressing Canberra’s commitment to a two-state solution.

A spokeswoman for Mr Morrison said the decision was disappointing.

“[It] represents a further diminution in Australia’s support for the state of Israel by the Labor government from the high water mark established by the Morrison government,” she said.

Opposition Leader Peter Dutton left the door open for the Coalition to abandon Mr Morrison’s policy, saying on Tuesday: “We’ll make an announcement about our policy in the run-up to the next election.”

Opposition immigration spokesman Dan Tehan said he stood by the Morrison government’s decision, but did not comment on whether it remained coalition policy.

“The decision-making and the process seems to have been very incoherent, very ad hoc and has caught everyone by surprise,” Senator Wong said.

-with AAP