Australia could face trade sanctions from Arab nations over its decision to stop using the term “occupied” in reference to east Jerusalem, Palestine’s ambassador to Canberra warned yesterday.

Izzat Abdulhadi said Australia’s new stance on east Jerusalem, which was annexed by Israel in a move never recognised by the international community, was a “substantial policy shift.”

He said trade sanctions could be put in place against Canberra if the government persisted with its provocative stance, which he emphasised left Australia isolated.

His comments came after 18 diplomats from countries including Indonesia, Egypt and Saudi Arabia protested to Australia’s Department of Foreign Affairs on Thursday.

Australia said last week it would no longer refer to east Jerusalem as “occupied” because the term carried “pejorative implications” and was neither “appropriate nor useful.”

“The truth is they’re disputed territories,” said Prime Minister Tony Abbott, in a comment that sparked fury throughout the Arab world.