Australia's announcement over the weekend that it was formally recognizing "west Jerusalem" as the capital of Israel but would not be moving its embassy to any part of the city for now came as a disappointment to many Israelis.
Prime Minister Benjamin Netanyahu has issued no official response either welcoming or condemning the decision.
At least one senior government official told Israel Hayom: "This isn't an achievement. The opposite."
However, Foreign Ministry Spokesman Emmanuel Nahshon tweeted on Saturday: "Israel views the decision of the Australian government to open its Trade and Defense office in Jerusalem as a step in the right direction."
Nahshon added that Israel "congratulated" the government of Australia for its stance on sanctions against Iran and its "pro-Israel position at the U.N. and against anti-Semitism."
Knesset Speaker Yuli Edelstein criticized the Australian decision, saying that the recognition of west Jerusalem as Israel's capital "amazed" him.
"All of Jerusalem is our eternal capital, not just a part of it," Edelstein said.
Science and Technology Minister Ofir Akunis said that Australia's announcement was welcome, "despite the fact that all of Jerusalem has been the capital of Israel for 3,000 years."
As well as recognizing west Jerusalem as Israeli, Australian Prime Minister Scott Morrison confirmed his country's support for a two-state solution to the Israeli-Palestinian conflict that would make east Jerusalem the capital of a future Palestinian state.
Nabil Shaath, an adviser to Palestinian Authority President Mahmoud Abbas, said, "Australia has always been an important country to us, a friendly country, a balanced country."
Shaath said that balance would be fully expressed when Australia officially recognized "the right of the Palestinians to a Palestinian state of their own with east Jerusalem as its capital."
Malaysian Prime Minister Mahathir Mohamad said on Sunday that Australia had "no right" to declare a division of Jerusalem, arguing that the city had always belonged to "Palestine."
"Why are they taking the initiative … to divide [Jerusalem] between the Arabs and the Jews? They have no right," he said.
