Anthony Albanese insists Australia won't be rushed into recognising a Palestinian state as European nations accelerate their own plans.
From May 28, Ireland, Spain and Norway will recognise Palestinian statehood in an attempt to accelerate ceasefire efforts in Gaza.
The move has prompted Israel to recall ambassadors from each country.
Asked about the recent declarations, Mr Albanese said Australia was a sovereign state that doesn't "respond to the decisions of other nations".
"I've had discussions with a range of leaders, including the prime minister of Spain and the prime minister of Ireland, in recent times," the prime minister told reporters in Brisbane on Thursday.
"But we've been clear that what we will be guided by, is whether recognition will advance the cause and progress towards a two-state solution."
A future where an Israeli and Palestinian state exist side-by-side has been the bedrock of the federal government's approach to the violence in the Middle East.
Foreign Affairs Minister Penny Wong has previously said it was "not a question of if we will recognise a Palestinian state, it's a question of when".
Australia supported a United Nations General Assembly resolution earlier in May that recommended the Security Council reconsider Palestine gaining full membership to the broader organisation.
Opposition MPs have backed Peter Dutton's call to consider boycotting the International Criminal Court after chief prosecutor Karim Khan sought arrest warrants for Israel Prime Minister Benjamin Netanyahu and Defence Minister Yoav Gallant.
Mr Khan found there were reasonable grounds to suspect Israeli ministerial involvement in possible war crimes, including starvation and intentionally attacking civilians.
Mr Dutton branded the decision an "obvious anti-Semitic act", called for it to be reversed, and said withdrawing from the court in protest couldn't be ruled out.
However, Mr Albanese noted Australia became a party to the Rome Statute - which established the international court - under former Liberal prime minister John Howard.
He said he was not going to "go into hypotheticals about things that haven't happened" given the court had not officially issued warrants yet.
Cabinet minister Ed Husic said it was "staggering" that the coalition talked tough on law and order and then turned its back on a court of law "on the basis of something that is uncomfortable to them".
Thet prosecutor found similar grounds to suspect three Hamas commanders committed crimes against humanity including murder, sexual violence and hostage-taking.
But there was no finding of moral equivalence between Israel and Hamas, which is a designated terrorist organisation in Australia, Mr Husic reiterated.
"People are being charged on the basis of individual action," he told ABC radio.
Liberal MP and former Australian ambassador to Israel Dave Sharma said Australia should be "examining our options and our future co-operation with the court" if the warrants are granted.
If the court agreed with the warrant, "then I think the time has come for Australia to stand up", Liberal colleague and chair of the Australia-Israel Allies Caucus Andrew Wallace said.
"Say, 'you know what, this was a bad move, the United States got it right, they refused to be a part of it in the first place'."
Hamas attacked Israel on October 7, killing 1200 people and taking more than 200 hostages, according to local authorities.
A counter-offensive in Gaza has since killed more than 35,000 people, the local health ministry says, with many more Palestinians facing starvation as Israel chokes the flow of aid into the territory.
Australia on Thursday officially listed the Yemeni movement Ansar Allah, also known as the Houthis, as a terrorist organisation.
In support of Palestine, the rebels have been blockading waters and attacking Israel-linked or destined ships at the Gulf of Aden, near the Red Sea.
Attorney-General Mark Dreyfus said their attacks have killed civilians, taken hostages and disrupted navigational rights and freedoms "undermining maritime security and global prosperity."
