Prime Minister Anthony Albanese has sought to take a broad approach to the Israel-Gaza conflict, as the opposition accuses Labor of division over foreign policy.
Israel has begun amassing its forces to strike back at Hamas after the Islamic terrorist group's cross-border attack, which has killed more than 1400 Israelis and resulted in more than 200 people being taken hostage.
The Israeli Defence Force's retaliatory campaign has killed at least 3400 people in the Palestinian territory.
Mr Albanese faced coalition accusations of leading a divided cabinet after minister Ed Husic said Australia needed to acknowledge the human impact on Palestinians.
"I feel very strongly that Palestinians are being collectively punished here for Hamas' barbarism," Mr Husic told ABC Radio on Thursday.
"I really do feel there is an obligation on governments, particularly the Israeli government, to follow the rules of international law and to observe in particular that innocence should be protected."
With rallies being staged across the country by pro-Palestinian and pro-Israeli groups, the prime minister told parliament it was important to ensure Australia remained a "microcosm" of different faith and cultural groups living together in harmony.
"There's no place for hate here," Mr Albanese told parliament.
"There's no place for anti-Semitism, as there's no place for Islamophobia in this country."
ASIO boss Mike Burgess has urged people to be cautious with their language, saying there was a direct connection to inflamed tension and violence.
He also said the spy agency was on alert for spontaneous violence.
Mr Albanese stood firm in his condemnation of Hamas, but also reiterated the call for the protection of all civilian life.
Mr Husic said Palestinians had been dehumanised.
"I've heard some pretty strong language references to Palestinians as human animals," he said.
"It's just wrong.
"And references to collateral damage, that's wrong."
Mr Husic said he was concerned a two-state solution wouldn't eventuate in the Middle East when the violence ended.
The prime minister said a two-state solution remained government foreign policy.
Israeli military spokesman Jonathan Conricus said the claim Palestinians were being collectively punished was "unfounded" and the IDF would conduct itself according to the law of armed conflict.
"Our enemy is the organisation Hamas ... these are the monsters that we're fighting against and not the population of Gaza," he said.
Amnesty International campaigner Nikita White welcomed Mr Husic's comments and said the collective punishment of civilians amounted to a war crime.
"You cannot punish civilians for the actions of an armed group," she told reporters at a pro-Palestine protest in Canberra.
Greens leader Adam Bandt called on the government to condemn Israel's invasion and bombing of Gaza.
"We are seeing hospitals bombed, people are starving, people are dehydrating and the United Nations has said the directions for people to leave their homes is unlawful," he said at the protest.
Deputy Liberal leader Sussan Ley said Mr Husic's comments had exposed "deep division" within Labor.
"Anthony Albanese must immediately clear up the confusion and explain whether he agrees with his cabinet minister or not," she said.
"There are obvious and long-standing consequences for division - cabinet ministers do not get the luxury of freelancing on foreign policy."
Senator Wong has warned Australians to leave Israel and to take any opportunity possible amid the "highly challenging and rapidly changing" situation.
More than 1500 Australians registered with the Department of Foreign Affairs have left Israel and the occupied Palestinian territories.
