Jordan has summoned Australia's charge d'affaires John Feakes after Canberra said it would no longer refer to annexed east Jerusalem as "occupied".

Australia 'risks isloation' over East Jerusalem exchange

"The ministry summoned the Australian charge d'affaires and informed him that the kingdom is concerned about the Australian government's decision to stop referring to east Jerusalem as 'occupied'," ministry spokeswoman Sabah Rafei said in a statement issued in Amman on Monday.

"The Australian government's decision violates international law and resolutions that consider east Jerusalem as an integral part of all Palestinian territories occupied in 1967."

Last week, Attorney-General George Brandis sparked Palestinian fury by saying Canberra would not use such "judgmental language" to describe an area which was the subject of negotiations.

Israel, which has a 1994 peace treaty with Jordan, hailed the remarks as "refreshing" but the Palestinian leadership denounced them as "disgraceful and shocking", with the ministry making a formal diplomatic protest on Sunday and summoning Australia's diplomatic representative.

Israel seized east Jerusalem during the 1967 Six-Day War and later annexed it in a move never recognised by the international community.

The Palestinians claim Arab east Jerusalem as the capital of their promised state.

The international community views all Israeli construction on land seized in 1967, including the West Bank, as illegal and a major obstacle to a negotiated peace agreement.

Under the peace agreement with Israel, Jordan is the custodian of Muslim holy sites in Jerusalem.