The nation was among 157 countries that supported the resolution, while eight voted against it, including the US and Israel.
It urged Israel to "bring to an end its unlawful presence in the Occupied Palestinian Territory as rapidly as possible" while recognising the "inalienable rights of the Palestinian people, primarily the right to self-determination and the right to their independent state".
Australia's UN ambassador says a two-state solution is the only way to break the cycle of violence. (AP PHOTO)
Australia's ambassador to the UN James Larsen told the General Assembly the position reflected growing international momentum.
"A two-state solution remains the only hope of breaking the endless cycle of violence, the only hope to see a secure and prosperous future for both peoples," he said.
Opposition foreign spokesman Simon Birmingham blasted the Albanese government for putting Australia "at odds" with the US and for having "abandoned a key democratic ally in Israel".
"Overnight, Labor has changed longstanding Australian positions at the United Nations in votes that will not protect a single civilian in the Middle East, prevent further terrorist attacks or release a single hostage still held by Hamas," he said.
Following Hamas' October 7 attack on Israel, fighting has widened in the region from Gaza to Lebanon, Yemen and Iran.
Earlier, deputy opposition leader Sussan Ley said it was disappointing that Australia would shift its stance away from that of the US and Israel at the UN.
Sussan Ley says the decision could affect Australia's close relationship with the US. (Mick Tsikas/AAP PHOTOS)
"We still have hostages in tunnels under Gaza. We still have Hamas in the Gaza Strip, almost in control. And how is this not rewarding terrorists at this point in time?" she told Sky News on Wednesday.
"At a critical point in the relationship that we should be having with the US, this is not going to encourage that strong closeness that we need with our nearest ally when it comes to the relationship we have to have."
In October, the coalition split from the US on the issue, disagreeing with US Vice President Kamala Harris who said her administration was working to secure a ceasefire in Gaza and Lebanon.
Opposition home affairs spokesman James Paterson at the time downplayed the breakaway.
