Labor says it would work with security and intelligence advisers to find the best way to respond to China's territorial claims in the South China Sea.
Labor has backed away from its tough talk about how it would respond to China's artificial islands in the South China Sea.
Opposition foreign affairs spokeswoman Tanya Plibersek said a Labor government would work with security and intelligence advisers to determine the best course of action over China's territorial claims for its man-made islands.
She said it was important not to talk these things up in a way that contributed to tensions.
Late last week, Labor defence spokesman Stephen Conroy said a Labor government would authorise the defence force to conduct freedom of navigation or overflight exercises in proximity to the Chinese islands any time if was considered safe and appropriate.
Foreign Minister Julie Bishop was also being cautious, saying on Tuesday it was a very sensitive topic and the government did not wish to add to tensions in the region.
China claims virtually all of the South China Sea and inflamed regional tensions when it started building its own islands on disputed reefs, adding airstrips, radar and communications and defence systems, plus troops.
It insists this is sovereign territory and a 12-nautical mile territorial limit applies. The US, Australia and other nations cite international law which says the 12-nautical mile rule doesn't apply for artificial islands.
So far the US Navy has conducted three freedom of navigation exercises, sailing within the 12-nautical mile limit.
Ms Bishop said Australian ships and aircraft routinely exercised freedom of navigation rights through the area. But it's yet to actually test China's 12-nautical mile zone, as has the US.
Such a move could actually enjoy significant Australian public support.
The latest Lowy Institute poll on Australian attitudes to the world show 74 per cent in favour of Australia conducting freedom of navigation operations in the South China Sea and 20 per cent against.
Senator Conroy first called for a unilateral freedom of navigation exercise in January, though Opposition Leader Bill Shorten stopped short of giving his wholehearted backing for such a step.
Ms Bishop said Australia didn't want to add to tensions but had made it plain it didn't recognise China's territorial claims, which were now the subject of a case brought by the Philippines in the International Court of Justice.
The court is expected to find in favour of the Philippines, although China says it won't abide by the ruling.
Ms Bishop said the ICJ would decide on a matter of international law, not on this particular boundary dispute, and China would face enormous pressure to abide by the ruling.
"It will do irreparable harm to its reputation if it thumbs its nose at the findings of the arbitration court and we have urged all parties to abide by the findings of the court," she said.