Australian Prime Minister Scott Morrison said Tuesday that his country was "open" to recognizing Jerusalem as the capital of Israel and moving its embassy from Tel Aviv to the city.
Earlier, Israeli Prime Minister Benjamin Netanyahu said Australia was considering recognizing Jerusalem as the capital of Israel.
Netanyahu's office said on Monday that he had spoken by telephone with his Australian counterpart and that the latter was "studying the official recognition of Jerusalem as the capital of Israel and the transfer of the embassy there."
Last December, US President Donald Trump amended Washington's firm policy on Jerusalem by recognizing it as the capital of Israel, a move that angered the Palestinians, the Arab world and Western allies.
The status of Jerusalem, which includes Islamic, Jewish and Christian sanctuaries, is one of the major obstacles to any peace agreement between Israel and the Palestinians.
The United Nations says that the status of the old city, which occupied Israel's eastern sector during the 1976 war, can only be resolved through negotiations. The Palestinians want East Jerusalem to be the capital of their independent state, while Israel says Jerusalem is the eternal united capital of Israel.
