The backlash over the federal government's refusal to acknowledge East Jerusalem as an occupied territory will not harm trade with the Middle East, Foreign Minister Julie Bishop says.
Ms Bishop will meet with ambassadors from Islamic nations to assure them Australia's support of the two-state solution hasn't changed, despite the government ruling out using the term "occupied" in relation to East Jerusalem.
The head of the Arab Bank Australia has warned the controversy will affect trade to the region if the policy isn't clarified - an outcome played down by the foreign minister.
"What I'm doing today is reassuring the ambassadors of the Arab world that we remain committed to that two-state solution," she told ABC radio.
"And of course we are a reliable trade partner with that part of the world and will continue to be so."
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Coalition MP Andrew Laming said he supported the government's change in language.
"I haven't seen it affect our trade relationships yet," he told reporters in Canberra.
"I fall on the side of changing the language and I accept there could be some implications."
Nationals MP George Christensen said the government wouldn't be "bullied" on foreign policy and, if there were trade ramifications, Australia would look to the World Trade Organisation for a solution.
Labor frontbencher Joel Fitzgibbon said the government's "misstep" was harming Australia's relationships.
"The government needs to fix this and fix it quickly because if they don't it's going to have impacts on our diplomatic relationships generally and particularly on trade," he told reporters.
