An international legal expert is urging the government to cut military ties with Israel, while the opposition says Australia should pressure Hamas to accept a US-brokered peace deal.
The 20-point peace plan, supported by Israeli leader Benjamin Netanyahu, would see Israel and Hamas lay down their arms and Donald Trump installed as the head of a transitional government for the Palestinian enclave.
The US president has given Hamas "three-to-four" days to accept the proposal, promising a "very sad end" if the listed terrorist group doesn't comply.
Mr Trump also suggested there was "not much" room to negotiate on the plan.
The federal opposition's most senior Jewish MP, Julian Leeser, said the Labor government has built political capital with Palestinian officials by recognising Palestinia