Australia will recognise a Palestinian state at the UN General Assembly in September, following similar moves by the UK, France and Canada, Prime Minister Anthony Albanese has said.
Albanese said Australia received commitments from the Palestinian Authority (PA) including to demilitarise, hold general elections and continue to recognise Israel's right to exist.
"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," he said on Monday.
Israel, under increasing pressure to end the war in Gaza, has said recognising a Palestinian state "rewards terrorism".
Since Saturday, five people have died as a result of starvation and malnutrition in Gaza, bringing the total number to 217 deaths, according to the Hamas-run health ministry.
It also said that in total more than 61,000 people have been killed as a result of Israel's military campaign since 2023.
Israel launched its offensive in response to the Hamas-led attack on 7 October that year, in which about 1,200 people were killed and 251 others were taken hostage.
The Palestinian Authority, which controls parts of the Israeli-occupied West Bank, earlier said recognition of statehood shows growing support for self-determination of its people.
Albanese said the decision was made after his government received commitments from Palestinian Authority President Mahmoud Abbas that Hamas would play no role in any future state.
The move also comes after conversations with his counterparts in the UK, France, New Zealand, and Japan over the past fortnight, Albanese said.
"There is a moment of opportunity here, and Australia will work with the international community to seize it," he told the media.
Last Sunday, a pro-Palestinian protest drew tens of thousands of supporters who walked across Sydney Harbour Bridge, a day after a court ruling allowed the demonstration to happen.