A senior adviser to Mahmoud Abbas, the Palestinian president, has accused Australia’s prime minister, Scott Morrison, of destroying the chances of Middle East peace in order to win a byelection, after Morrison said he may recognise Jerusalem as Israel’s capital.

Nabil Shaath said on Tuesday that Palestinian officials were now lobbying Arab countries to reassess their trade and political ties with Canberra, hours after diplomats from 13 Middle Eastern and north African embassies in Australia held an emergency meeting on the issue.

After Donald Trump’s move, Morrison announced on Tuesday that he was considering relocating the Australian embassy from Tel Aviv to Jerusalem and recognising the latter city as the Israeli capital.

Moving Australia's embassy to Jerusalem a 'fatal mistake', Middle Eastern envoys warn Read more

Within hours, the speech had also drawn ire from two of Australia’s key regional neighbours – Indonesia and Malaysia, both Muslim-majority countries. Jakarta expressed “strong concern”, while Malaysia’s “prime minister-in-waiting” Anwar Ibrahim said Australia could jeopardise its relations with Asian countries.

Morrison’s Liberal party faces a potential byelection upset in what was previously considered a safe seat in the key Sydney electorate of Wentworth. If his party does not win, the coalition government will lose its one-seat majority in parliament.

The Liberal candidate for Wentworth, Dave Sharma, denied that the Morrison’s announcement, which signals the reversal of a 70-year foreign policy stance by Australia, was connected to the byelection.

However, the constituency is home to a sizeable Jewish population and Morrison credited Sharma – also a former ambassador to Israel – for convincing him that the embassy move was a “sensible suggestion”.

In the West Bank city of Ramallah, Shaath, a former foreign minister, said Morrison’s announcement was a hostile action that destroyed the chances of peace.

“This doesn’t really help. It might increase the chances of the government winning Wentworth in Australia,” he said. “But if this is the way you do politics in the Middle East in order to win a byelection in Australia, then please allow me to be very negative towards the policy of that Australian government.

“We’ll do our best that it will cause damage to Australia’s relations with the Arab world … This is a policy that brings nothing but ruin.”

The status of Jerusalem has been one of the most sensitive issues in past Israeli-Palestinian peace efforts. As well as the West Bank and Gaza, Israel captured the eastern side of the city in 1967 from Jordanian forces. It later annexed those neighbourhoods where thousands of Palestinians live, to global condemnation.

International consensus has been that Jerusalem’s status should be settled in a peace deal and recognising it as a capital for either side would prejudice one party over the other. If Australia went ahead with the move, it would join just the US and Guatemala, which also relocated their embassy this year.

A Christian evangelical, Morrison came to power in August on the back of a revolt by conservatives in his party. Israel’s prime minister, Benjamin Netanyahu, has looked to evangelicals for support, many of whom see the Jerusalem being Israel’s capital as consistent with biblical prophecy of the second coming of Jesus and the rapture. However, Morrison denies his religion was a factor in his announcement.

He and his foreign minister released a joint statement amid the diplomatic fallout, saying that any decision on Jerusalem would be “subject to a rigorous assessment”. They added that Australia was committed to a two-state solutionand an embassy move would not block Palestinian claims over the eastern part of the city.

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Sharma, they said, had suggested recognising Jerusalem as Israel’s capital “without prejudice to its final boundaries, while acknowledging East Jerusalem as the expected capital of a future Palestinian state. Specifically, the government will examine the merits of moving Australia’s embassy to west Jerusalem.”

But Shaath disputed the rational, saying: “Claiming that considering Jerusalem the capital of the state of Israel and moving the Australian embassy to Jerusalem will contribute towards a regional peace process between the Israelis and the Palestinians? What logic is this?”

New Zealand’s prime minister, Jacinda Ardern, also said the proposal would not help Middle East peace. “We support a two-state solution and our view has been that any shift in representation, in the way we saw with the United States, does not move us closer to that peaceful resolution,” she said.

Morrison said the government would review the Iran nuclear deal, the Obama-era pact that Trump has withdrawn the US from and Netanyahu has been pressing other countries to ditch. The move would put Australia at odds with European signatories who still back an agreement that aims to curtail Tehran’s nuclear ambitions.