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Prime Minister Anthony Albanese has announced Australia will recognise Palestine as a state at the United Nations leaders' week in late September.

Unlike some other countries, the government has put no conditions on the recognition, relying on assurances received from the Palestinian Authority, the current Palestinian governing body in the West Bank.

Announcing the decision on Monday, Albanese said he had spoken to Israeli Prime Minister Benjamin Netanyahu last Thursday. In what Albanese said was a long call, Netanyahu argued the case against the proposed Australian action.

"I put the argument to him that we need a political solution, not a military one, because a military response alone has seen the devastation in Gaza, and that has contributed to the massive concern that we see from the international community," Albanese said.

Albanese told a joint news conference with Foreign Minister Penny Wong "a two-state solution is humanity's best hope to break the cycle of violence in the Middle East and to bring an end to the conflict, suffering and starvation in Gaza".

Asked whether this was a symbolic gesture, Albanese said, "This is a practical contribution towards building momentum. This is not Australia acting alone. What we are seeing is a range of countries engaging in detailed dialogue."

Albanese said that over the past fortnight, he had discussed the issue with UK Prime Minister Keir Starmer, French President Emmanuel Macron, New Zealand Prime Minister Chris Luxon and Japanese Prime Minister Shigeru Ishiba.

He also had a call last week with the Palestinian Authority President Mahmoud Abbas.

Albanese said the Palestinian Authority had committed to there being no role for Hamas in a Palestinian state and reaffirmed it recognised Israel's right to exist, as well as making other pledges.

Shadow Defence Minister Angus Taylor said there is a risk the decision would be rewarding Hamas for its attacks on Israel on October 7 2023.

When asked about this criticism, Albanese said "Hamas don't support two states".

"This is an opportunity to isolate Hamas, that has been forged by the very clear statements of the Palestinian Authority on June 10, and the very clear statements of the Arab League," he said.

Before the announcement, Netanyahu strongly condemned the move.

He said it was "shameful" and "disappointing" that European countries and Australia would "march into that rabbit hole" and buy "this canard". He made it clear Israel would not be deterred.

Asked about Australia and other countries moving to recognition, he said, "Well, first of all, those who say that Israel has a right to defend itself are also saying, 'but don't exercise that right'."

He said Israel was applying force judiciously and "they know it".

"They know what they would do if right next to Melbourne or right next to Sydney you had this horrific attack. I think you would do, at least what we're doing - probably maybe not as efficiently and as precisely as we're doing it."

The Albanese government's decision, which was reported to a cabinet meeting early Monday, followed years of pressure within the Labor party which has ramped up dramatically in recent months.

Wong spoke at the weekend to US Secretary of State Marco Rubio about Australia's proposed course.