Palestine asks government for policy shift

Palestine wants the federal government to return to using the term "occupied" to describe Israeli settlements in East Jerusalem.

The government last year ruled out using the term, arguing it was pejorative and unhelpful to the peace process in the Middle East.

The policy shift featured in talks between Foreign Minister Julie Bishop and her Palestine counterpart Riyad al-Maliki in Sydney on Thursday.

Mr al-Maliki asked Ms Bishop for a "correction" to the government's stance, saying the description was at odds with international law.

"Settlements are illegal and it has to be dealt with as such," he told ABC TV.

However, Mr al-Maliki was pragmatic about the chances of that happening, saying it would require more than one meeting.