Australian government scared of backlash after it recognises occupied Jerusalem as 'Israeli capital'

Australia on Friday warned citizens to take care while travelling in neighbouring Muslim-majority Indonesia, ahead of an expected but contentious move to recognise Jerusalem as Israel's capital.

Prime Minister Scott Morrison is expected to announce - as soon as Saturday - that his government will follow US President Donald Trump's lead and recognise the contested city as Israel's capital.

Scores of Australians preparing to jet off to Bali and other tropical island destinations for upcoming summer holidays should "exercise a high degree of caution", the Department of Foreign Affairs warned.

Officials in Canberra told AFP they expected the announcement to come on Saturday, the Jewish Sabbath, but cautioned that events could yet alter those plans.

East Jerusalem is recognised as occupied Palestinian territory under international law. Critics say declaring Jerusalem the capital of Israel inflames tensions and prejudges the outcome of final status peace talks.

Trump's decision to move the US embassy from Tel Aviv last May prompted tens of thousands of Palestinians to demonstrate in Gaza. At least 62 Palestinians were killed by Israeli fire that day.

Morrison is expected to stop short of actually shifting Australia's diplomatic corps to the Holy City, amid warnings from his own officials about the cost and security implications.

But recognising Jerusalem would help the embattled Australian PM - who faces the prospect of an election drubbing next year - with Jewish and conservative Christian voters, and win him friends in the White House.

His supporters argue Israel has the right to choose its own capital and peace talks are dead in the water, so there is no peace to prejudge.

But the move still risks heightening unrest, both in Australia's immediate neighbour Indonesia - the world's most populous Muslim nation - and further afield.

The Palestinian government would press for Arab and Muslim states to "withdraw their Ambassadors" and take some "meat and wheat" style "economic boycott measures" if the move went ahead, Palestinian ambassador to Australia Izzat Abdulhadi told AFP.

Jakarta protests

Indonesia's government, facing domestic pressure at home, had reacted angrily earlier this year, when Morrison floated the idea of both recognising Jerusalem and moving the Australian embassy there.

The issue has put the conclusion of a bilateral trade agreement on hold.

In the meantime, Australia's foreign ministry has moved to prepare the ground.

"Demonstrations have been held in recent weeks around the Australian Embassy in Jakarta and the Australian Consulate-General in Surabaya," it warned in a public notice Friday.

"Protests may continue at the Embassy in Jakarta or at any of Australia's Consulates-General in Surabaya, Bali and Makassar," the Department of Foreign Affairs said. “Exercise a high degree of caution."

Tensions are currently running high in both Gaza and the occupied West Bank.

Israeli snipers have shot dead more than 235 Palestinians in Gaza since a demonstration movement began in March to demand the end of Israel’s decade-long blockade.

In the West Bank, four Palestinians and two Israeli have been killed in 24 hours of bloody violence, the worst violence there in months.

On Thursday the Israeli army launched raids into the Palestinian city of Ramallah after a Palestinian shot dead two Israeli soldiers at a bus stop in the occupied West Bank.

Netanyahu vowed to 'legalise' thousands of settlements homes considered unlawfully-built even by Israel.