Bill Shorten has raised Labor's concerns about settlements in Palestinian territories during "constructive" formal discussions with Israeli Prime Minister Benjamin Netanyahu.
The pair talked for almost an hour in Sydney on Friday on the sidelines of Mr Netanyahu's historic tour of Australia, the first for a sitting Israeli PM.
The opposition leader said he raised the contentious issue of settlements in the West Bank "clearly and unambiguously".
He also reiterated Labor's support for a two-state solution.
"We want to see Israel safe and secure of its borders; we support the rights of the Palestinians people to have their own state.
"We expressed the view very clearly and unambiguously that where settlements and their expansion are a road block to peace, that's damaging to the peace process."
The opposition leader has come under pressure over calls from Labor elders to recognise the state of Palestine.
Former Labor prime ministers Kevin Rudd and Bob Hawke, backed by ex-foreign ministers Gareth Evans and Bob Carr, want Australia to join 137 other countries in giving diplomatic recognition to an independent Palestine.
The Labor leader was accompanied by shadow attorney-general Mark Dreyfus, opposition foreign affairs spokeswoman Penny Wong and Labor backbencher Michael Danby.
Other topics also discussed included Iran and concerns about countries that refused to recognise Israel.
Mr Shorten said he believed it was always sensible to maintain an "objective and sceptical" attitude towards Iran.
