An Australian man faces 30 months in an Israeli prison after pleading guilty to charges of spying for militant Palestinian organisation Hamas.

Eyad Abu Arga, 46, a Palestinian refugee who holds Australian citizenship, has been in custody since March when he was arrested at an Israeli airport.

He claimed he entered Israel while on a 25th wedding anniversary holiday with his wife.

But Israel alleged he was recruited to carry out espionage for Hamas while working in Saudi Arabia.

It alleged Abu Arga carried out surveillance work, including sourcing information and technology to improve the accuracy of missile strikes, conducting research for espionage using a sophisticated panoramic camera, and devising new ways to find out if a phone is tapped.

Abu Arga has maintained his innocence since capture but has now agreed to a plea bargain with prosecutors.

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He has admitted he was recruited in Saudi Arabia by members of Hamas - the militant group Israel and many other nations regard as a terrorist organisation - and that he did carry out certain surveillance activities.

His guilty plea is in return for a jail sentence of 30 months.

One charge, which included allegations he had carried out training with Hamas in Syria, was dropped.

Abu Arga is due to be sentenced next month.

His barrister Leah Tsemel said her client met with one or two members of Hamas while working in Saudi Arabia.

"They've asked him, since his profession is the technological profession, to look for some information or for some inventions in the fields of technology," she said.

Israel alleged Abu Arga had fought for the Palestinian cause for 30 years and had been collaborating with Hamas since 2007.

But Ms Tsemel says the involvement with the group in Saudi Arabia was born of naivety.

"They pulled his leg, he didn't really understand what it was all about. It was a very friendly attitude. He couldn't even dream that he would find himself on the bench one day," she said.

"He's a person who bumped into activists of the Hamas and attempted, or rendered some very, very shallow services to them. He's not, in no way a terrorist."

Ms Tsemel says Abu Arga was never a member of Hamas.