Australia is on track to follow in the footsteps of the US and formally recognise West Jerusalem as Israel's capital.

Prime Minister Scott Morrison will deliver a speech to the Sydney Institute on Saturday to throw his support behind Israeli government, The Weekend Australian reported.

Mr Morrison will support the push to name the contested city as Israel's capital on the belief it will progress peace talks in the Middle East.

'The Australian government has decided that Australia now recognises West Jerusalem, as the seat of the Knesset and many of the institutions of government, is the capital of Israel,' Mr Morrison is expected to say.

Prime Minister Scott Morrison (pictured) will deliver a speech to the Sydney Institute on Saturday to throw his support behind Israel

He will also take aim at the United Nations and accuse them of anti-Semitism.

Mr Morrison will hit back at the UN's refusal to acknowledge Israel's claims of self-defence as the militant Palestinian group Hamas continues to hurl attacks at the country.

The Morrison government will also seek to recognise a future Palestinian state.

Mr Morrison first made his view on West Jerusalem public days before the Wentworth by-election in October.

At the time he openly aired his support of moving the Australian embassy from Tel Aviv to Jerusalem.

Mr Morrison will support the push to name West Jerusalem (pictured) Israel's capital on the belief it will progress peace talks in the Middle East

He is expected to put the move on ice, at least until a peace settlement determines the final status of the city.

'And we look forward to moving our embassy to West Jerusalem when practical, in support of, and after, final-status determination,' Mr Morrison will say in his speech.

In the meantime, a defence and trade office will be set up in Jerusalem.

The symbolic gesture is intended to reflect the bilateral relationship between the two sides.

Mr Morrison's comments about recognising West Jerusalem have also sparked severe blowback from the international community, and placed Australia and Indonesia on rocky ground.

Head of the Palestinian delegation in Canberra Izzat Abdulhadi also warned the decision could strain Australia's relationship with Middle Eastern countries.

Mr Morrison is also expected to support the Iran Nuclear deal, a u-turn on his previous desire to scrap it.

He will also look to bring in 'autonomous sanctions' against Iran, a response to the country's role in sponsoring terrorism in the Middle East.

Mr Morrison will also draw on the settlement activity in the Palestinian territories and say the current settlements 'undermine peace'.