But despite being highly-critical on the timing of the announcement, it remains unclear whether the Coalition would reverse the decision if it wins the next election.

And a former Coalition MP has accused his party of "naivety" over its decision to recognise West Jerusalem in 2018, saying the situation in the occupied Palestinian territories comes "very close to apartheid".

Foreign Minister Penny Wong has received flak from inside and outside Labor, after Israel summoned Australia's ambassador to demand an explanation.

Senator Wong on Tuesday revealed Labor would walk back former prime minister Scott Morrison's "cynical" decision, which she said put a two-state solution in jeopardy.

The Foreign Minister said the status of Jerusalem would be agreed via peace negotiations, insisting Australia would "not waver" in its support for either Israel or the Palestinian people.

Speaking to ABC Radio on Wednesday afternoon, Anthony Albanese appeared to concede Labor had not properly laid the groundwork for the announcement.

But he accused his predecessor Mr Morrison of being "duplicitous" when he upended Australia's long-standing position on the Israeli capital.

"Some things can always be done better ... but the truth is we've been very clear what our position was," he said.

"The previous Australian policy under Labor governments, Liberal governments ... has been that the status of Jerusalem would be the subject of the talks between the Israeli side and the Palestinian side for a solution which is peaceful, that creates two states."

Earlier, Coalition foreign affairs spokesman Simon Birmingham accused the government of bungling the announcement, delivered on a Jewish holiday and weeks out from an Israeli election.

"[It] has not provided any compelling reasons as to why it is in Australia's national interest to take this decision at this time," he told the ABC on Wednesday.

"There is also then the shambolic handling of this decision ... doing it at a very sensitive time in Israeli politics, completely unnecessarily."

Mr Albanese framed the Coalition's decision, which came during the 2018 Wentworth by-election campaign, as an attempt to woo the seat's large Jewish population.

Former Liberal MP Dave Sharma, the party's candidate for Wentworth in 2018, has criticised Senator Wong's reversal, which he suggested did not rule out a two-state solution.

But his former colleague Ken O'Dowd took aim at the Coalition over the issue, welcoming what he described as a "return to normal".

"I was pretty disappointed [in 2018], which I told Scott Morrison at the time. I think it was a little bit of naivety on our behalf in the Coalition that we jumped that way," he told The Canberra Times.

"I think what [Mr Sharma] said was what he believes, but when you see it from the other side of the fence, and there are big walls that separate Israel from Palestine ... it's very close to apartheid over there."

Independent MPs Zoe Daniel and Allegra Spender, who ousted Mr Sharma at the May election, both criticised Labor for failing to properly consult the Jewish community before announcing the decision.

Senator Birmingham would not reveal whether the Coalition would revert back to its in-government stance if it wins office, stressing a federal election was years away.

"We would not have made this decision. Whether we will reconsider that position in the future is something, of course, that we would look closer to the next election, cognisant of events as they unfold," he said.

But Liberal senator Andrew Bragg was more declarative, insisting the Coalition's position recognising Jerusalem was "clear".

"Australia does not get to choose the capital cities of other countries. The selection of capital cities is a matter for foreign nations," he said.

"We should respect our ally's selection of Jerusalem, which reflects the historical and contemporary reality."

Labor MP Josh Burns took aim at his own party, saying people across Australia, including himself, had been "hurt by the decision".

Mr Burns was particularly apologetic for the announcement coming on a Jewish holy day, which he said "clearly shouldn't have happened".

"I didn't like the Morrison government playing politics with these sensitive issues, and it's my view that any further alteration to Australia's policy needed to be considered extremely carefully," he said.

"To my disappointment, this did not happen."