Scott Morrison has flagged moving Australia’s embassy in Israel from Tel Aviv to Jerusalem, copying Donald Trump’s controversial proposal, in a shift that appears timed to coincide with the Wentworth byelection.

Guardian Australia understands moving the embassy was discussed when Malcolm Turnbull was prime minister, and Julie Bishop was foreign affairs minister, given Trump’s position – but the shift was dismissed out of hand as being not in Australia’s interests because it would counter the two-state solution, and also upset the relationship with Indonesia.

While government conservatives welcomed the shift, one senior moderate branded Morrison’s stance “completely mad” and predicted it would backfire in the Wentworth contest. “This will not pick up one vote.”

The former Labor foreign affairs minister Gareth Evans said moving the embassy would be “catastrophic” for Australia’s international reputation.

Morrison acknowledged the previous advice to government when speaking to reporters on Tuesday morning, but declared he was “open-minded” on moving Australia’s diplomatic presence to Jerusalem and recognising Jerusalem as the capital.

In another Trumpian shift, the prime minister said Australia would also review the Iran nuclear deal.

The prime minister dismissed questions about the timing of the announcement, and insisted Australia remained committed to a two-state solution. “But frankly, it hasn’t been going that well. Not a lot of progress has been made, and you don’t keep doing the same thing and expect different results”.

Morrison, an evangelical Christian, credited the Liberal party’s Wentworth byelection candidate Dave Sharma, a former Australian ambassador to Israel, with raising the issue, and suggesting a way forward. Voters go to the polls on Saturday in the electorate, which has a Jewish community of about 12.5%.

“When sensible suggestions are put forward that are consistent with your policy positioning and in this case pursuing a two-state solution, Australia should be open-minded to this and I am open-minded to this and our government is open-minded to this,” the prime minister said.

Asked by a reporter whether his faith played a role in the shift, given evangelical Christians had been the biggest supporters of Trump’s position on Jerusalem, Morrison issued a flat denial. “My faith and religion has nothing to do with this decision.”

Morrison told reporters the Trump administration had not prevailed on Australia to mimic its stance, and the shift had been flagged with the Israelis. On Tuesday morning Australian time the Israeli prime minister, Benjamin Netanyahu, said in a tweet he had spoken to Morrison about the proposal.

“I spoke today with [Scott Morrison]. He informed me that he is considering officially recognizing Jerusalem as the capital of Israel & moving the Australian embassy to Jerusalem. I’m very thankful to him for this. We will continue to strengthen ties between [Australia and Israel].”

The foreign affairs minister, Marise Payne, said the government had briefed the Indonesian ambassador about its intentions “and communicated through our embassy in Jakarta with the Indonesian foreign minister”.

She said the conversations with Jakarta would continue.

The Palestinian delegation to Australia slammed the decision on Tuesday, calling it “deeply disturbing” and saying it could embolden the Trump administration in their plans to resolve the Israel-Palestinian conflict in a way that leaves the status of Jerusalem and Palestinian refugees “off the table”.

“The short-term political gain that could be secured by moving the Australian embassy from Tel Aviv to Jerusalem would surely be outweighed by the detriment both to Australia’s international standing and in its relations with Arab and Muslim-majority countries and the international community more broadly,” said the delegation in a statement.

The delegation urged the government to “exercise caution and prudence towards this sensitive final-status issue and to seriously consider the consequences of any such move”.

The Palestinian representative to Australia, Izzat Salah Abudulhadi, hosted a meeting of representatives of several Middle Eastern countries on Tuesday to discuss the prime minister’s proposal to consider moving the embassy to Jerusalem.

The head of the Palestinian delegation was joined by representatives from the embassies of 12 countries in the Middle East and North Africa: Kuwait, Jordan, Algeria, the United Arab Emirates, Egypt, Sudan, Qatar, Lebanon, Saudi Arabia, Morocco and Iraq. Representatives from Libya and Tunisia were not able to attend.

On Monday Sharma told an election forum he was “open” to moving the embassy. Sharma, a former ambassador to Israel, has previously written that he believed Australia should “consider recognising Jerusalem as Israel’s capital”.

Even if Australia did not move the embassy it should “at least consider recognising Jerusalem as Israel’s capital without prejudice to its final boundaries or potential status as capital of future Palestinian state,” he wrote on Twitter in May.

“Where else do we disagree with a country about where its capital is.”

On Tuesday Sharma denied that the announcement smacked of desperation ahead of this Saturday’s byelection. He stressed that this was a review, but said “I think we should be open to considering the idea.”

“This is very much within the context of a two-state solution,” he said. “The idea that west Jerusalem would not be part of Israel in a two-state solution is ludicrous,” he said.

Sharma said that many major government offices were already located there.

The review was being conducted in context of the UN vote on a Palestinian taking over the chair of the G77, Sharma said. Australia intends to vote against the resolution.

Earlier this year the US moved its embassy, effectively recognising Jerusalem as the true capital of Israel. Israeli forces shot and killed 58 Palestinians and wounded at least 1,200 after the decision sparked massive protests in Gaza.

Australia’s secretary of the Department of Foreign Affairs and Trade, Frances Adamson, previously said the US embassy move had “not been helpful” and had made the peace process even more difficult.

Evans, who was foreign minister from 1988 to 1996, called Morrison’s move a “shocking mistake”.

“This is unprincipled opportunism of the first order, and shifting the embassy at this stage would be a shocking mistake, and catastrophic for what is left of our international reputation outside Washington.

“Of course in any final two-state negotiation, Jerusalem would be the capital of both states, Israel in West and Palestine in East, and if serious negotiations were ever to start, accepting that shift could be a useful interim reward for significant Israeli movement on settlements or whatever. But you never, ever give something this big for nothing, and Netanyahu has given less than nothing to any peace process.”

In June, after the Liberal party’s youth wing passed a motion supporting the move, the then foreign minister Julie Bishop said there was no chance of the government moving its embassy.

“While I understand the sentiment behind this resolution, the Australian government will not be moving our embassy to Jerusalem,” Bishop said at the time.

“Jerusalem is a final status issue and we have maintained that position for decades and we are doing all we can do to ensure that any support we give to the Palestinian Authority is only used for purposes that we determine.”

So far only the US and its ally Guatemala have moved their embassies to Jerusalem.

Internal critics of Morrison’s shift predicted Jewish voters in Wentworth would see the positioning in Canberra as patronising. One pointed out that a number of Jewish voters would have already cast their ballots in the weekend contest to avoid voting on the sabbath.

Bishop George Browning, president of the Australia Palestine Advocacy Network, was horrified. “I find the announcement extraordinary because it must be the first time in Australian political life that a government has tried to shore up its chances in a byelection by using foreign policy.

“The previous prime minister Malcolm Turnbull and the previous foreign minister Julie Bishop resisted this for the very good reason that to move the embassy to Jerusalem is [the same] as agreeing with the Israeli prime minister that Jerusalem is the undivided capital of Israel.

“They’re immediately throwing out the policy of a two-state solution, which Australia has held for a very long time, decades, in order to shore up their chances in a local byelection. It’s disgraceful.”

Labor slammed the flagging of a possible change of policy on Israel and Palestine. The shadow foreign affairs minister, Penny Wong, blasted the move. “Foreign policy, and Australia’s national interest are far too important to be played with in this fashion,” she said.

“Instead of playing dangerous and deceitful word games with Australian foreign policy in a desperate attempt to win votes Scott Morrison should try governing in a way that reflects the values of the people of Wentworth by committing to serious action on climate change, and legislating to protect teachers and students from discrimination,” Wong said.



”The people of Wentworth, and all Australians, deserve a leader who puts the national interest ahead of his self-interest, and governs in the best long-term interest of the nation, not one prepared to play games with long-standing foreign policy positions five days out from a byelection”.