CANBERRA, Oct. 15 (CGTN) -- Australia will consider recognizing Jerusalem as Israel's capital and shifting its embassy there from Tel Aviv, Australia's prime minister said on Tuesday.

The status of Jerusalem is one of the thorniest obstacles to a peace deal between Israel and the Palestinians. Israel regards all of the city, including the eastern sector that it annexed after the 1967 Middle East war, as its capital.

Last December, US President Donald Trump reversed decades of US policy by recognizing Jerusalem, enraging the Palestinians and upsetting the Arab world and Western allies.

Australia was firm in its refusal to follow suit at the time, however, Prime Minister Scott Morrison told reporters in parliament he was now "open-minded" about doing so, while not changing Australia's policy of support for a Palestinian state.

"The orthodoxy that's driven this debate which says issues like considering the question of the capital are taboo. I think we have to challenge that," Morrison said.

"The whole point of a two-state solution is two nations recognized living side by side," he added, saying he was open to the suggestion from Dave Sharma, Australia's former ambassador to Israel, that Australia support West Jerusalem as Israel's capital and East Jerusalem as Palestine's.

"No decision has been made in regarding the recognition of a capital or the movement of an embassy... but at the same time, what we are simply doing is being open to that suggestion."

The US Embassy became the only foreign embassy in Jerusalem in May, and Guatemala and Paraguay followed Washington's lead days later and also moved their embassies, although Paraguay returned its mission to Tel Aviv last month. Israel closed its embassy in Asuncion in response.