Foreign Minister Penny Wong is backing US President Joe Biden, who says Israel's prime minister is hurting the country more than helping it, as the death toll in Gaza mounts.
The world stood in solidarity with Israel after the Hamas terrorist attack on October, Senator Wong said.
But the international community was now "horrified at the current situation, the loss of innocent civilian life and the scale of the humanitarian crisis", she said.
"Unless Israel changes its course it will continue to lose support," she told the Australian Financial Review's Business Summit on Tuesday.
Hamas - designated a terrorist group by the Australian government - killed 1200 Israelis and took more than 200 people hostage in an attack on October 7.
More than 31,000 Palestinians have been killed since Israel, led by Prime Minister Benjamin Netanyahu, retaliated against Hamas in Gaza with a further 1.7 million people displaced, according to the local health ministry and United Nations.
Humanitarian aid needed to be ramped up quickly, independent senator David Pocock said.
"This is urgent, we can’t stand by and allow people to starve," he said.
The Australian government is also under pressure to restore funding to the United Nations Relief and Works Agency for Palestinian Refugees (UNRWA).
It was suspended in January when Israel accused some UN workers of participating in the Hamas attack.
The European Commission, Sweden and Canada have restored funding to the organisation.
UNRWA "have done everything that has been asked of them," Senator Pocock said after Australia's representative to the UN called for Israel to present the evidence it used to make the claims and co-operate with the investigation so funding could be reinstated as soon as possible.
Israel had "refused to listen" to international calls for more aid for struggling Gazans, cabinet Minister Ed Husic said.
The investigation into the allegations and restoration of funding for UNRWA needed to happen as quickly as possible, he said.
"The biggest thing that needs to be front and centre here is that children over there are starving in Gaza," he told the ABC's Q+A program.
"People are without food, water, medicine and there is a concern of a further loss of life as a result of Israel's military operations."
The government was getting advice on UNRWA funding, the prime minister said.
"We're looking at a range of ways in which we could provide further support for Palestinians in Gaza who are suffering terribly," Anthony Albanese told ABC radio.
An UNRWA report from February detailed allegations Israel has coerced detained Palestinians into falsely admitting Hamas links and that staff took part in its attack, Reuters reported.
It also detailed abuse including physical beatings, waterboarding and threats against family members, the agency reported.
Israel acted in line with international law to protect detainee rights, its military said.
Australia's Jewish groups have backed more aid for Gaza but don't want UNRWA involved.
Senator Wong says UNRWA is the only organisation that can deliver humanitarian aid to Palestinians in the besieged enclave at the scale required.
Strict conditions to ensure Australian money isn't misappropriated must be put in place before funding resumes, opposition foreign affairs spokesman Simon Birmingham said.
There had to be "clear tests to be able to authenticate and verify that those conditions are being met," he said.
Other alternatives to delivering aid should also be looked at, he added.
