The Australia/Israel and Jewish Affairs Council (AIJAC) said the Morrison government's willingness to consider moving the Australian embassy to Jerusalem is a step towards resolving the Palestinian-Israeli conflict.
Prime Minister Scott Morrison said earlier this week he is considering following the US decision to move the Australian embassy from Tel Aviv to Jerusalem.
He denied the timing of his remarks had anything to do with winning the Jewish vote in the Wentworth by-election, which has one of the largest Jewish populations of any electorate in the country.
About 12.5 per cent of voters in Wentworth are from the Jewish community.
“When sensible suggestions are put forward that are consistent with your policy positioning and in this case pursuing a two-state solution, Australia should be open-minded to this and I am open-minded to this and our government is open-minded to this,” Mr Morrison said.
'Right thing to do'
Jeremy Jones, from the Australia/Israel and Jewish Affairs Council, says he believes the decision is a step towards restarting the peace negotiation process in the decades-long conflict.
“Is it the right thing to do? Now if it is the right thing to do then you would say okay it may have implications for how people vote, but it is not done for the purpose of winning votes, it is done because it is right,” he said adding that most Jewish voters had already cast their postal votes before Mr Morrison’s remarks because the Wentworth by-election fell on Saturday - the Sabbath.
Mr Jones said countries like Russia and the United States have sought a circuit breaker to jump start the stalled peace process in the Israeli-Palestinian conflict.
“Now there are people saying: all right, let's look at some of the issues - and one of the issues is Jerusalem - and say why aren't we doing what is going to shake people's complacency a little bit?
“The Russians for example, not very long ago, said West Jerusalem is the capital of Israel. And the Jerusalem under Jordanian control before 1967 is going to be the place where we're eventually going to recognise the capital of the state of Palestine one day.
“Donald Trump said similar comments. And Scott Morrison didn't exclude that in his consideration of the issue. So there are people who are saying: 'all right, we've got to do something a little bit different'.”
Warnings of trade fallout
Representatives from 13 Middle Eastern and North African embassies in Australia have warned the federal government's move could lead to a breakdown in trade ties with Arab and Muslim nations.
The signal of a potential shift in Australia’s foreign policy was also criticised in an editorial in the Jewish newspaper Plus61J.

Palestinian children play at the Al-Aqsa Mosque compound in the Old City of Jerusalem. Source: AAP
“Morrison’s cynicism is, perversely, offensive to the Jewish community in that it presumes Jewish loyalty to Israel would trump their concerns with Australian issues,” the editorial said.
“The announcement also treats Israel as if it is a domestic plaything, only for the PM to have revealed his naivety at how far-reaching its impacts on foreign relations can be.”
Final decision due by year's end
Mr Jones said while there was a diversity of opinion within the Jewish community, there is broad consensus in the political centre for relocating the Australian embassy to Jerusalem as an olive branch to restart the peace process.
“So when we come down to the situation relating to the Middle East, within the Jewish community there would be a very broad centre - they want an Israel that exists within safe, secure boundaries,” he said.
“But we don't want a situation where Palestinians or anybody else has to suffer unnecessarily for that to be met. And therefore, as many aspirations for as many people as possible are a consideration.
“We're not only concerned with our interests.”
Scott Morrison said he will make a final decision on potentially relocating the Australian embassy in Israel later this year, along with a position on the Iran nuclear deal.
In May, the US moved its embassy to Jerusalem after announcing the policy shift in December 2017.
Palestinian Health Ministry officials said at least 58 people were killed and at least 1200 injured in mass protests following the Trump administration’s decision.
Jerusalem has high symbolic, religious and cultural value to both Israelis and Palestinians.
The city was the Jewish capital in biblical times, being the location where the temple, the holiest place for Jews, was built.
On the same site as the temple, Muslim rulers later built the Al-Aqsa mosque, Islam’s third-holiest place after Mecca and Medina.