Federal Labor leader Bill Shorten will raise his party's opposition to Jewish settlements in the West Bank when Israeli Prime Minister Benjamin Netanyahu makes an historic visit to Australia this week.

Key points: Benjamin Netanyahu will be the first sitting Israeli leader to visit Australia

Benjamin Netanyahu will be the first sitting Israeli leader to visit Australia Bill Shorten says he will tell Mr Netanyahu rapid settlement expansion must end

Bill Shorten says he will tell Mr Netanyahu rapid settlement expansion must end Kevin Rudd last week said Australia should recognise the Palestinian state

Mr Netanyahu will be the first sitting leader of Israel to visit Australia when he arrives on Wednesday.

Last week, former Labor prime minister Kevin Rudd told the ABC Australia should follow the lead of Sweden and the Vatican in formally recognising the Palestinian state.

Israel's controversial settlement program, and in particular a law introduced last month that retrospectively legalised about 4,000 settler homes built on Palestinian land, has faced staunch criticism from Foreign Minister Julie Bishop who expressed concern over the expansion of Israeli settlements in the West Bank but declined to comment on the new law.

Mr Shorten said Labor's position on peace in the Middle East was clear.

"Labor has long supported a two-state solution," he said.

"We support the right of both Palestinians and Israelis to live within secure borders.

"I will make it clear to Mr Netanyahu that where settlement-building is an obstacle to two-state solution, it should be stopped. Full stop.

"I've said this in the past, and I'll continue to argue that the radical expansion of settlements is in many cases a roadblock to the two-state solution."

Labor has long agonised over what stance it should take on the long and intractable conflict between Israel and Palestinians.

Last week, the former Labor prime minister Kevin Rudd told the ABC Australia should follow the lead of Sweden and the Vatican in formally recognising the Palestinian state.

Several other Labor heavyweights — including former prime minister Bob Hawke and former foreign ministers Gareth Evans and Bob Carr — have made a similar call.

The prospect of progress

In 2015, the ALP Conference passed a motion that said if there was no progress towards a two-state solution, then a future Labor government would "discuss joining like-minded nations who have already recognised Palestine".

Pro-Palestine Labor MPs say while the party is not yet in government, those conditions have already been met.

They want Mr Shorten to warn Mr Netanyahu that if Israel continues to expand settlements, then the next Labor government will inevitably recognise Palestine — leaving Israel even more isolated internationally.

But the Opposition Leader said it would be premature to raise the issue of Palestinian recognition with Mr Netanyahu.

"Yes, I think progress has been too slow, but I haven't written off the prospect of progress," he said.

"I think there are a lot of people of goodwill from both the Palestinian and Israeli side and where there is goodwill, we have to keep pushing the hope.

The only thing which we can guarantee is we need to do everything we can to support a two-state solution full stop … I think any other path is just the wrong way to go."

Pro-Israel lobby groups in Australia have accused Palestinian advocates of ignoring the fact that Israel faces the constant threat of attacks from Palestinian territories.

"Laying all the blame on the Israelis is misconceived and totally counterproductive to the goal most normal people want, which is seeing if we can make progress on path to a two-state outcome," said Colin Rubenstein, the executive director of the Australia/Israel & Jewish Affairs Council.

"The surest way forward is for the resumption of direct bilateral negotiations, and premature recognition simply undermines the obtainment of that goal."

Mr Rubenstein said he was confident a majority of Labor MPs remained unconvinced about the merits of recognition.

But one pro-Israel Labor MP gave a different assessment.

"They [pro-Palestinian MPs] will move another motion at the next ALP Conference and if it doesn't get through they'll do it again until they get their way [on recognition]" he said.