Rural Liberals are seething over Attorney-General George Brandis's remarks about East Jerusalem, accusing him of "intellectual arrogance".

In a Senate hearing earlier this month Senator Brandis declared the Government would no longer refer to East Jerusalem as "occupied".

Arab countries viewed the change in language as a policy shift, and the Palestinian delegation to Australia said it risked trade sanctions.

This has upset some of Senator Brandis's Liberal colleagues, with one MP saying it could have created a debacle of similar proportions to Labor's 2011 decision to ban live cattle exports to Indonesia.

The MP accused Senator Brandis of "intellectual arrogance", saying he does not spend enough time with normal people and instead operates in a Senate vacuum.

"George Brandis couldn't sell lollies to children," he said.

Another said: "Poor old George wouldn't know a live animal if he fell on it."

Liberal backbencher Craig Laundy says he believes East Jerusalem is occupied.

"If you were to go to East Jerusalem today, you would see Israeli soldiers walking through with guns," he said.

"Now in terms of me being a simple guy from Reid, in Reid if it looks like a duck and it quacks like a duck, it's a duck."

The ABC understands the issue was raised with Defence Minister David Johnston by a number of delegates at the West Australian Liberal Party's State Council meeting in Manjimup, south of Perth, on Saturday.

So far, farming and pastoral groups have said little publicly about the issue. The ABC has been told they are disappointed by the remarks but do not want to inflame the issue by saying too much.

East Jerusalem, along with the rest of the West Bank, has been under Israeli control since the Six Day War in 1967.

A UN Security Council resolution issued in November that year declared the territories to be occupied, a word also used by the International Court of Justice and the UN General Assembly.

The General Assembly has since adopted a string of resolutions referring to the area as "occupied" and "Occupied".

Term fraught with 'pejorative implications': Abbott

In this month's Senate hearing, Senator Brandis said neither of the major political parties used or accepted the term occupied East Jerusalem.

The next day, after consulting Foreign Minister Julie Bishop, he returned to explain the Government's position, saying "the description of East Jerusalem as 'occupied East Jerusalem' is a term freighted (sic) with pejorative implications, which is neither appropriate, nor useful."

"It should not and will not be the practice of the Australian Government to describe areas of negotiation in such judgmental language," he said.

Speaking in New York a couple of days later, Prime Minister Tony Abbott gave his take on it.

"It is important, as far as you can, not to use loaded terms, not to use pejorative terms, not to use terms which suggest that matters have been prejudged," he said.

"The truth is they are disputed territories and let's try to ensure that disputes are resolved fairly to all as best we can in an imperfect world."

Ms Bishop insists the Government's policy has not changed and tried to clarify Senator Brandis's remarks in a meeting with Middle Eastern diplomats last week.

Despite the Foreign Minister declaring many times over the Government's strong support for a "just and lasting two-state solution", concerns remain.

Islamic foreign ministers meeting in Saudi Arabia condemned Australia, with the Organisation of Islamic Cooperation saying the Government should respect its commitments under international law.