The Australian government will no longer refer to East Jerusalem as an occupied territory, it emerged Wednesday in a statement released by Attorney-General George Brandeis after a Senate Estimates hearing. This constitutes a dramatic shift in Australian policy on Israel since 1967.

During the hearing, which focused on the country's foreign policy in the Middle East, Greens Senator Lee Rhiannon called East Jerusalem occupied territory several times. Brandeis, who was responding to questions during the hearing, rejected use of the term "occupied" and said such a label predetermines an issue that is subject to Israeli-Palestinian negotiations.

"The tendentious description that Senator Rhiannon is using is not the descriptor that the government uses,'' he said. ''I don't profess [a] view on this matter. I'm merely correcting the use of a term."

Several senators subsequently demanded to know what the government's position on East Jerusalem is, but Brandeis refused to elaborate. However, after several hours, Brandeis recited a written statement indicating it does not define East Jerusalem as occupied.

Drafted in coordination with Foreign Minister Julie Bishop and departmental head Peter Varghese, the statement said that ''The description of East Jerusalem as 'Occupied East Jerusalem' is a term freighted with pejorative implications, which is neither appropriate nor useful.''

The statement also indicated that Australia supports a peaceful solution to the "dispute" between Israel and the Palestinian people which "recognizes the right of Israel to exist peacefully within secure borders and also recognizes the aspiration to statehood of the Palestinian people."

The statement went on to say that ''the description of areas which are subject to negotiations in the course of the peace process by reference to historical events is unhelpful." The statement stressed that "historical events" refers to Israel's occupation of the West Bank and East Jerusalem in 1967.

Several Australian senators criticized the statement, arguing that it is a departure from longstanding policy espoused by both right and left governments. Independent Senator Nick Xenophon told Fairfax Media that previous governments have all defined East Jerusalem as occupied.

''It's an extraordinary and reckless departure from the bipartisan approach of the last 47 years,'' Senator Xenophon said. ''It is contrary to the government's position it is completely unhelpful to walk away from the term 'occupied'. If you don't acknowledge historical facts, what are the hopes for lasting peace in the Middle East? ''Even Israel's strongest ally, the United States, does not hold this position," he said.

The parliament hearing and the statement come just weeks after Palestinian Chief Negotiator Saeb Erekat lodged an official letter of protest to Australian Foreign Minister Julie Bishop over Australian Ambassador to Israel Dave Sharma 's meeting with Housing Minister Uri Ariel in his office in East Jerusalem. In the letter, Erekat called the meeting a violation of international law an attempt to legitimize an illegal situation.

Foreign Minister Bishop herself questioned the illegality of Israeli settlements on a visit to Israel in January. During an interview to the Times of Israel she said "I would like to see which international law has declared them illegal."

Most of the international community does not recognize Israel's authority in East Jerusalem.