"The previous discussion was premised on the point that you couldn’t pursue this issue without risking or without prejudicing the final status. Now Dave is arguing the opposite to that and he’s saying that is possible. He’s arguing it can be done consistent with Australia’s long-running position … He’s actually changing the way in which the issue is conceived," Mr Morrison said. Mr Morrison said the reviews of Australia’s position "does indicate a shift in our thinking as a government" but denied they were inconsistent with long-held policies and maintained he was committed to a two-state solution for Israel and Palestine. Australia, along with most of the rest of the world, has long had its Israel embassy in Tel Aviv and avoided recognising Jerusalem as the Israeli capital because the status of the city remains unresolved in the decades-long land dispute between Israelis and Palestinians. Loading Replay Replay video Play video Play video But Mr Morrison said Mr Sharma had argued persuasively in an opinion article in Fairfax newspapers in May that recognising Jerusalem was consistent with a two-state solution and could even help break the long deadlock.

Mr Sharma argued that west Jerusalem would inevitably be part of Israel in any final boundary settlement, while east Jerusalem would likely become Palestine’s capital. Moving an embassy to west Jerusalem recognised this reality, he wrote. Loading He said the questions of where the embassy would be located and when it was moved were "longer term considerations". Mr Morrison acknowledged Australia’s position in the past had been based on the view that recognising Jerusalem as Israel's capital "could compromise a final status in terms of what any final boundaries ... might be" and therefore prejudice the delicate territorial negotiations between the Israelis and Palestinians. "I intend to discuss this further with cabinet colleagues in the coming months," he said.

Asked whether he was making the announcement to help with Wentworth, Mr Morrison said the timing was driven by the UN vote on whether the Palestinian Authority should chair the G77 group of developing nations. The other announcements flowed from this but he had no control over the timing of the UN vote, he said. "I don’t make any apology for the fact that Dave Sharma would be enormously helpful for the government as a member of Parliament in helping the government ... to pursue all of these issues for our government and those in Wentworth who feel strongly about these things." Asked whether he accepted most of the rest of the world had not seen it that way, Mr Morrison said: "That’s true. And I think we can make our own case as to why we make our own decisions and I believe by making this case, we could potentially, should we end up going down that path, be able to advance the two-state solution process. The other one hasn’t been working that well." Mr Morrison said the government would "review what has been our position to be supportive of the Iran nuclear agreement". This would include looking at the International Atomic Energy Agency’s advice on Iran’s compliance but "also whether that agreement is sufficiently capable of preventing Iran from having a capability to develop nuclear weapons".

"These are obviously existential questions for countries like Israel and so I want to be satisfied - it’s been three years now and I think it’s timely to look at those issues and review our position and do that in a fairly systematic way." Loading He said that during upcoming international summits Australia would consult other world leaders and get their thoughts. "We do share real concerns about how Iran’s capability can be a very destabilising force in the Middle East, particularly for allies like Israel, so I’m acknowledging that concern and saying the position we’ve held up until now continues to be our position until if we decided to alter it - but I’m flagging we’ll be taking a close look at that." He would also deepen defence and security arrangements by exchanging more defence attaches at embassies.