Palestinian officials are expressing outrage over a decision by the Australian government to stop labeling east Jerusalem as “occupied” territory, and say they are now lobbying Muslim nations to reevaluate their relations with Australia.

One Australian lawmaker called the conservative government’s decision an “extraordinary,” “reckless” and “massive shift” in foreign policy.

By contrast, Israeli Prime Minister Benjamin Netanyahu “embraced” the Australian announcement. At his weekly cabinet meeting on Sunday, Netanyahu said, “To say this sharply and with such clarity and, I would say, courage, is refreshing given the chorus of hypocrisy and ignorance, ignorance not only of ancient history, but of recent and current history.”

Australia’s Attorney General George Brandis on Thursday said that labeling east Jerusalem “occupied” was judgmental and pejorative and should not be used.

Chief Palestinian negotiator Saeb Erakat (L) sits next Palestinian president Mahmud Abbas (C) as they attend the Arab foreign ministers' meeting at the Arab League headquarters in Cairo, on April 9, 2014. (Photo: Mohamed El-Shahed/AFP/Getty Images)

Chief Palestinian negotiator Saeb Erakat (L) sits next Palestinian president Mahmud Abbas (C) as they attend the Arab foreign ministers’ meeting at the Arab League headquarters in Cairo, on April 9, 2014. (Photo: Mohamed El-Shahed/AFP/Getty Images)

“The description of East Jerusalem as ‘Occupied East Jerusalem’ is a term freighted with pejorative implications which is neither appropriate nor useful,” Brandis said during a Senate meeting. “It should not and will not be the practice of the Australian government to describe areas of negotiation in such judgmental language.”

The Times of Israel reported that senior Palestinian Authority official Saeb Erakat sent a letter to Australian Foreign Minister Julie Bishop in which he wrote, “Palestine will request that the Arab League and the Islamic Conference [Organization of Islamic Cooperation] review the relations of the Arab and Islamic world with Australia in light of Australia’s unlawful recognition of the illegal settlement regime in occupied Palestine.”

Erakat further wrote that the term “occupation” reflects a “legal fact” grounded in United Nations resolutions.

Israel captured east Jerusalem and the West Bank (known biblically as Judea and Samaria) from Jordan during the 1967 War during which Israel was attacked by its Arab neighbors. It later annexed the eastern part of Jerusalem and declared it the Jewish state’s united capital, but the Palestinians maintain east Jerusalem should be the capital of their future state.

Besides the Palestinian lambasting, the Australian government was also criticized by its ideological opponents domestically. ”It’s an extraordinary and reckless departure from the bipartisan approach of the last 47 years,” Independent Senator Nick Xenophon said. ”Even Israel’s strongest ally, the United States, does not hold this position.”

Former Australian foreign minister Bob Carr who is with the Labor Party also blasted his successors, telling Australia’s ABC television, “If Australia is saying that you can’t talk about an ‘occupied east Jerusalem’, all of that logic means that Australia is now saying you can’t talk about an occupied West Bank.”

“The State Department would be appalled,” Carr said. “We have sided with the religious, ethno-nationalist right of Israeli politics. That means we are encouraging the hardliners – the most hardline of the hardline in Israel – to think in terms of a greater Israel, an annexation of what has been seen by the world up until now as territory occupied as a consequence of the 1967 war.”

The Australian policy shift stands in sharp contrast with the U.S. and other western countries, which do not recognize Israeli sovereignty over east Jerusalem.

The U.S. maintains its embassy in Tel Aviv, a reflection of the non-recognition policy.

The State Department regularly denounces the construction of homes in east Jerusalem for Israelis. There is also the case of Zivotofsky v. Kerry currently under review by the Supreme Court in which Menachem Zivotofsky, a U.S. citizen who was born in Jerusalem to American parents, has asked the State Department to indicate his place of birth on his passport as “Jerusalem, Israel.” State Department policy currently is to leave the country blank for U.S. citizens born in Jerusalem.

The eastern part of Jerusalem holds the major religious sites, including the Western Wall and Temple Mount, the holiest site in Judaism and third holiest site to Muslims. The Old City of Jerusalem also includes the location of Jesus’ crucifixion.

Netanyahu on Sunday said the Australian policy shift more aptly acknowledges Jerusalem’s history.

“What has really happened here? Who invaded who? Who occupied what? What is subject to negotiation? What is the area in dispute?” Netanyahu said. “I certainly appreciate this stand by the Australian government and I am certain that all those who want to see an agreement here based on peace, justice and truth – and it is impossible to build peace based on historic lies – would agree. There is truth and it must be embraced,” Netanyahu said.

Israeli Foreign Minister Avigdor Liberman praised the Australian leadership for its “serious consideration of the issue,” which “shies away from populistic statement and does not attempt to appeal to and flatter radical Islamic forces.”

“I hope that other states will discover the bravery and honesty that Australia has found,” Liberman said.