The NSW premier has admitted he was not fully aware of the security risk posed by lighting the Opera House sails in Israeli colours.
Chris Minns' concession came the morning after a Sydney council voted to fly the Palestinian flag in solidarity with innocent victims of the conflict until a ceasefire was declared.
The state government has faced criticism over the fallout from the premier's decision to light the sails to mark the October 7 attack in southern Israel by Hamas militants.
Senior police concerned about public safety warned the Jewish community to steer clear of the Opera House over concerns of clashes with Palestine sympathisers, who later rallied in the forecourt.
Some attendees at the rally later turned to violent, anti-Semitic rhetoric.
Mr Minns on Wednesday said he was aware of the planned rally but it had not triggered security risks "to the extent it should have".
While standing by his decision to light the sails, made without asking for security advice, he said it should have been followed by enabling the Jewish community to gather in the forecourt to mourn the attack.
"I made an error," Mr Minns told a NSW budget estimates hearing.
"Not only did we not do that, but the area was taken over by violent protests where anti-Semitic and race-hate was used and I don't have an excuse for that.
"All I can do is apologise."
Internal police documents made public after a motion by independent MP Rod Roberts suggest senior police learned of the Opera House lighting through media reports.
In an October 8 email, the police commissioner's chief of staff, Christine McDonald, said she and Deputy Commissioner David Hudson were "both equally concerned" at the impact the lighting of the sails "might have on our streets".
She requested an urgent threat assessment on the risks of the action.
The leader of the force's hate crime unit later told senior police the Palestinian community was "incensed" by the proposed lighting.
But Mr Minns said his responsibilities were broader than simply to public safety, including showing solidarity with the state's 40,000-strong Jewish community.
Opposition Leader Mark Speakman said the premier's "captain's call" showed "staggering incompetence" in his failure to fully assess the risks.
On Tuesday night, a major council representing one in four Muslims in Sydney agreed to fly the Palestinian flag over its offices and a local park until a ceasefire was called in Gaza.
The Labor-led motion passed Canterbury-Bankstown council on Tuesday evening and also allowed for a public memorial to reflect on innocent lives lost.
It also included a call to the federal government to work with the international community to "end the humanitarian disaster unfolding in Gaza".
Israel's ambassador to Australia, Amir Maimon, said although he disliked seeing local municipalities "raising the other side's flag" he could understand the decision.
"I live in a democracy ... I'm not the type of diplomat that believes that everyone should support Israel," he said.
Opposition Leader Peter Dutton said he hoped the local council also condemned Hamas, which was a listed terrorist group in Australia.
"People need to be very careful with the actions that they take and that they are not encouraging behaviours that aren't just acceptable - behaviours that we saw for example at the Sydney Opera House," he said.
