Australia has formally recognised Palestine as a sovereign and independent state, completing a landmark shift in foreign policy over the Israel-Gaza war.

The prime minister, Anthony Albanese, announced formal recognition at the United Nations in New York, in a move timed to coincide with similar declarations by prime ministers Keir Starmer of the UK and Mark Carney of Canada.

The recognition, effective from Sunday, prompted a furious response from the Israeli prime minister, Benjamin Netanyahu, who put western leaders on notice for a possible military response in Gaza when he returns from the US.

Albanese said 80 years of violence in the Middle East was too long.

“Enough is enough. We must end the cycle of violence,” he said.

“The terrorist atrocities that occurred by Hamas on 7 October ensure and underline why Hamas can play no role in the future Palestinian state. But just as the Jewish people have a homeland in Israel, Palestinians have a legitimate aspiration for their own homeland as well.”

The plan is designed to build renewed momentum for a two-state solution, including a ceasefire in Gaza and the release of the hostages from terror attacks orchestrated by Hamas.

In August, Australia said it would join the international push led by France, prompting fury from Israeli’s leader Benjamin Netanyahu and possible retribution from the US president, Donald Trump.

Albanese will speak at a major conference on a two-state solution to the conflict between Israel and Hamas this week.

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The establishment of an embassy and active diplomatic relations will flow once the Palestinian Authority meets reform commitments sought by the international community.

They include recognition of Israel’s right to exist and commitments to hold democratic elections and enact significant reform to finance, governance and education.

Governments recognising Palestine insist Hamas must have no role in any new state.

“This is the world saying that what is going on in Gaza is completely unacceptable,” Albanese said.

“You can’t have a circumstance where people have been denied essential food and water and medicines. You can’t have the number of civilian deaths that we’ve seen.”

Netanyahu hit out at leaders recognising Palestine, including Albanese.

“There will be no Palestinian state,” he said.

“I have a clear message to those leaders who are recognising a Palestinian state after the horrendous 7 October massacre: You are rewarding terror with an enormous prize.

“And I have another message for you: It’s not going to happen.”

He said the Israeli government’s response would come after his return from the United States this week, telling world leaders: “Stand by.”

The foreign minister, Penny Wong, responded to Netanyahu from New York, saying Australia was pressing for peace.

“We’re working with others because we want to be part of the global momentum for peace,” she said.

“That is where other countries are. That is what people are working for.”

US President Donald Trump, who opposes recognition and has threatened retaliation against Canada already, will be an outsize presence in New York this week. Albanese is trying to secure his first face-to-face meeting with the president, even as a group of 25 of his close allies warned Australia’s recognition of Palestine could spark “punitive measures” from the US.

The group, including Trump loyalists Ted Cruz of Texas and Elise Stefanik of New York, wrote to Albanese, Starmer, Carney and French president Emmanuel Macron urging a rethink at the weekend.

But Israel’s government is increasingly isolated on the world stage, including over its latest military offensive targeting Gaza City. The continued expansion of Israeli settlements in the occupied West Bank has also angered international leaders.

A United Nations independent international commission of inquiry found last week that genocide is occurring in Gaza.

Its report accused Netanyahu and other senior Israeli leaders of incitement of genocide. Israel’s foreign ministry categorically rejected the report’s finding and called for the commission’s abolition.

There is no timeline yet for the international court of justice hearing into Israel’s compliance with an international convention on genocide, but observers expect it is unlikely to occur before 2027.

Albanese has been a vocal proponent of Palestinian statehood for decades, and Labor’s national platform has called for recognition to be a priority for Australian governments.

The White House moved to block senior Palestinian representatives from travelling to the UN this week for talks, denying members of the delegation visas.

The opposition leader, Sussan Ley, said Labor had extended recognition of Palestine ahead of crucial conditions being in place.

“Hamas still holds Israeli hostages, seized during the terrorist raids of 7 October 2023. Hamas is still in power in Gaza and continues to attack Israel. The Palestinian people can see no hope of democratic self-governance while Hamas is in power,” she said.