Australia has broken ranks with the United States and Israel to vote in favour of a draft United Nations resolution recognising "permanent sovereignty" of Palestinians to natural resources in the occupied territories for the first time in more than two decades.
A total of 155 countries voted in favour of the draft resolution in a UN committee, including Australia, the United Kingdon, New Zealand, France, Germany and Japan.
The US voted against the proposal along with Israel.
The UN General Assembly will now be asked to consider the draft resolution.
It calls on the organisation to recognise "permanent sovereignty of the Palestinian people in the Occupied Palestinian Territory, including East Jerusalem, and of the Arab population in the occupied Syrian Golan over their natural resources".
It demands Israel stop destroying infrastructure such as water and sewage pipelines and electricity networks, and to stop confiscating Palestinians homes and farms.
The Australia/Israel & Jewish Affairs Council said Australia had consistently abstained from voting, or voted against the proposal since 2003.
A spokesperson for Foreign Minister Penny Wong said the resolution reaffirmed calls within the UN for a two-state solution.
"While Australia does not agree with everything in the resolution, this vote reflects international concern about Israeli actions that impede access to natural resources, and ongoing settlement activity, land dispossession, demolitions and settler violence against Palestinians," the spokesperson said.
"We have been clear that such acts undermine stability and prospects for a two-state solution."
Australia also backed a second draft resolution, blaming Israel for an oil slick which hit Lebanon during the 2006 war and demanded the country pay compensation.
The vote follows previous decisions by the Albanese government in the UN which have hardened Australia's stance against Israel's actions in Gaza.
In December Australia voted in favour of a ceasefire in the UN General Assembly, and voted in May in favour of giving Palestinian observers full membership of the UN.
The decision was criticised by Australia's Jewish lobby.
"It is disappointing that our government feels the way to end the war and the wider conflict is by pressuring an ally and a democracy that has achieved peace with every Arab party willing to accept it, while asking nothing of the side mired in dysfunction, terrorism and autocracy," Executive Council of Australian Jewry co-chief Alex Ryvchin said in a statement.
"This shift in voting won't change much in Israel where the nation is concerned with Hamas and Hezbollah and hostages rather than the judgements passed by our government.
"But it will be noticed in Washington and certainly by Australians with a connection to the conflict, which may well be the point."
The Australia Palestine Advocacy Network said it was "long overdue".
"Australia's support marks an acknowledgement of the catastrophic impact of Israel's relentless appropriation and destruction of Palestinian resources and sends a clear signal that the world is demanding accountability for these injustices," APAN president Nasser Mashni said.
"This vote should be a turning point for the Australian Government — it must recognise and act upon its legal obligation to use all economic, political and diplomatic tools at its disposal to help end Israel's genocide, illegal occupation, and apartheid in Palestine."
Shadow Foreign Minister Simon Birmingham said the vote put Australia further at odds with the United States.
"We're concerned that this is yet another shift in position by the Albanese government who, prior to the last election, reassured Australia's Jewish community and other voters that there was no difference between the major parties when it came to their positions on Israel, Palestine and those Middle East questions," Senator Birmingham told the ABC's Afternoon Briefing.
"And yet, since then, again and again and again, the Labor government has shown that they are dramatically changing those positions, that they've significantly changed it in relation to the pathway to a two-state solution."
Senator Birmingham cited US advisor Nicholas Koval's comments that there was a "clear and persistent institutional bias directed against " Israel by the United Nations.