The call for Palestinian statehood goes further than official party policy, which backs a two-state solution but only commits a Labor government to discussion of "joining like-minded nations" and "announcing the conditions and timelines" for Australian recognition, should the peace process falter.

On Friday, Mr Netanyahu will meet with Mr Shorten and opposition foreign affairs spokeswoman Penny Wong in Sydney, where they are expected to discuss Israel's settlement construction in occupied territory. This follows Mr Netanyahu's meetings and appearances with Prime Minister Malcolm Turnbull as he works through a four-day Australian trip, the first official visit of an Israeli prime minister.

Victorian MP Maria Vamvakinou, co-convenor of the Parliamentary Friends of Palestine group, said recognising a Palestinian state is "about saving the two-state solution," arguing that settlement activity is diminishing the viability of such a resolution.

"My position has been for quite a while now that it's time for a game-changer in this protracted process and I think that game-changer is recognition of a Palestinian state," she said.

She welcomed the recent calls from former prime ministers Bob Hawke and Kevin Rudd and former foreign ministers Gareth Evans and Bob Carr to join the approximately 130 countries that have recognised Palestine as a state.

"They understand the complexity of this issue. And for them to come forward now and say, after all this, this is probably the only way forward. I think that intervention is credible and it's timely."

Queensland MP Graham Perrett deferred to Senator Wong but said he "definitely" backs statehood and that "the current situation is not working".

"As far as I'm concerned, Julie Bishop's silence has been deafening when it comes to illegal settlements and the way forward. She has been a joke as a foreign minister when it comes to speaking up against the injustices that are occurring in a nation-state that has policies that are all but apartheid-like," he said.

The party's Left faction is strongly supportive of moving ahead with formal recognition and expects this policy will be adopted at the next national conference.

Right faction figures Michael Danby and Sam Dastyari have hit back at the calls from Labor figures to recognise Palestine. The staunchly pro-Israel Mr Danby said Mr Carr, Mr Evans and Mr Hawke "want to try and provoke the Israeli prime minister and upset relations between him and the Labor Party prior to Netanyahu's visit". Senator Dastyari questioned the heavy focus on the issue.

The party's current position is a result of a compromise reached at the last conference in 2015 but some members of the Right faction are increasingly supportive of a more pro-Palestine stance.

Western Australian MP and counter-terrorism expert Anne Aly said she supports recognition of a Palestinian state if it will aid a two-state solution, emphasising the need for sensitive, well-researched and measured actions.

"I think it is an important gesture to recognise the Palestinian state and to recognise their legitimate aspirations as well as the aspirations of the Israeli people as well," she said, bemoaning the lack of progress in resolving the conflict.

"It is a central issue in Australia's relationship not just with Israel but with Arab countries and the Middle East. It is the one single issue that has dominated Arab politics for several decades now with no end in sight. And it's an issue that has impacted a whole range of other issues, including conflict in the area, including terrorism and regional security."

Prime Minister Malcolm Turnbull and Mr Netanyahu have held bilateral ministerial meetings and attended a handful of ceremonial and community events in recent days.

On Thursday, the two governments released a joint statement committing to defence and cyber-security co-operation, combating terrorism, trade expansion, and increased aviation and tech innovation links.

Mr Netanyahu was met with a rousing show of support during an event at Sydney's Central Synagogue on Wednesday night. His speech - in the heart of Mr Turnbull's Wentworth electorate - received an emphatic reaction from the Zionist-rich crowd.

The Australian government recently reaffirmed its support for a two-state solution to the Israeli-Palestinian conflict after President Donald Trump seemingly dropped American insistence on the outcome, a longstanding and bipartisan pillar of US foreign policy.

This week, Foreign Minister Julie Bishop said she did not believe "there will be a lasting peace if a Palestinian state is unilaterally forced upon Israel" and reiterated that the resolution would need to come from direct negotiations between the Israeli government and Palestinian Authority.

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