Hundreds of delegates are preparing to arrive in Adelaide for the Labor Party's three-day national conference starting Thursday, where the draft policy will call for stronger action on Palestinian rights.
The Israeli embassy said policy declarations should not target "only one side".
It released a four-page document to the media critiquing Labor's draft platform, which condemns settler actions in the West Bank and a newly announced death penalty.
Israeli ambassador Hillel Newman said his embassy was simply "presenting facts" for decision makers.
"When we see issues that are relating to Israel ... and they're based perhaps on misinformation, we'll put our information forward for people to read it if they want to,'' he said on Tuesday night.
"We are not forcing ourselves on anyone."
While the draft platform does not accuse Israel of genocide, it pushes for better recognition of Palestinian rights.
"Labor opposes the annexation of Palestinian territory and wants Israel to bring its illegal settlement activity and the occupation to an end, to see security for Palestine, for Israel and for the region," the Labor policy document reads.
"Labor urges the government to prevent any support being given to illegal settlement activity or extremist settler violence, and to implement further action and sanctions as necessary."
It reaffirms Australia's stand against capital punishment and states Labor condemns all "discriminatory laws which target Palestinians''.
Labor's draft platform also "unreservedly condemns terrorism and violent extremism, including as perpetrated by Hamas and other extremists".
Settler violence against Palestinians in the West Bank received "disproportionate attention" and did not reflect the state's identity or values, the Israeli embassy said.
"The embassy respectfully submits that several elements of the draft national platform risk placing responsibility for the conflict on one party while giving insufficient attention to the decisions, conduct and continuing obligations of the Palestinian leadership and terrorist organisations such as Hamas," the embassy said.
Human rights groups sounded the alarm when Israel passed a law to create special military tribunals with powers to impose the death penalty for those responsible for the October 7, 2023, attacks by Hamas and other armed groups that killed about 1200 people.
Israel's military response to the Hamas attacks has killed more than 72,000 people in Gaza, according to local health authorities.
The Australia Palestine Advocacy Network has accused the Israeli embassy of intervening in Australia's domestic political processes.
The group called on Labor to strengthen its platform by recognising Israel's actions in Gaza as genocide - a charge Israel strenuously denies - and ending defence exports and military cooperation that risk contributing to war crimes.
"There is an important distinction between diplomatic engagement with the Australian government and a foreign state publicly attempting to influence the internal policy-making processes of an Australian political party," network president Nasser Mashni said.
The debate over the draft platform comes as the federal government announced $25 million of for aid in Gaza.
The funding includes $15 million for the UN Horizon Fund, which assists the reconstruction for Palestinians in the Gaza Strip, as well as $10 million to the World Bank's Palestinian Fund for Reconstruction and Development.
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