Evidence showed there were reasonable grounds to believe three top Hamas commanders committed war crimes following its attack against Israel, the International Criminal Court's chief prosecutor Karim Khan said.
Alleged crimes included torture, cruel treatment, murder, rape and acts of sexual violence and taking hostages.
Benjamin Netanyahu is accused of responsibility for war crimes. (AP PHOTO)
There were also reasonable grounds to suspect Israel's Prime Minister Benjamin Netanyahu and Defence Minister Yoav Gallant bore responsibility for war crimes and crimes against humanity in retaliation against Hamas in Gaza, Mr Khan said.
Alleged crimes included using starvation of civilians as a method of war, wilfully causing great suffering, persecution and intentionally directing attacks against civilians.
US President Joe Biden branded the warrant application "outrageous".
Prime Minister Anthony Albanese refused to weigh in despite Jewish groups and the opposition coming out against the prosecutor's move.
"I don't comment on court processes in Australia, let alone court processes globally which Australia is not a party," he told reporters in Sydney on Tuesday.
The focus needed to be on a humanitarian ceasefire and aid, as well as for the remaining hostages to be released, he said, pointing to the need for progress on a two-state solution.
Opposition Leader Peter Dutton chastised the prime minister for "tarnishing and damaging our international relationships with like-minded nations when he's not strong enough to stand up alongside President Biden".
"It's an abomination and it needs to be ceased. This action is anti-Semitic and it's against the interests of peace in the Middle East," he said.
Hamas launched an attack on Israel on October 7 that killed 1200 people and led to more than 200 being taken hostage, according to Israeli tallies.
Israel launched a ground offensive and bombing campaign in Gaza that has killed 35,000 people and injured about 77,000 more, according to its health ministry.
Germany said the application for the arrest warrants at the same time gave a "false impression of equivalence" between Hamas and Israel, an argument echoed by Jewish groups and the opposition in Australia.
Jewish groups have criticised the ICC's actions. (Con Chronis/AAP PHOTOS)
Former ICC prosecutor Luis Moreno Ocampo rejected such an equation.
"The prosecutor is not saying they're equal, they're saying both are suspects," he told ABC Radio on Tuesday.
The simultaneous charging was also part of a prosecutor's job to show impartiality, he said.
The application for the warrants was welcomed by the Australian Federation of Islamic Councils and Australian Muslim Advocacy Network, which also called for sanctions.
The prosecutor's statement was "legally misconceived and morally indefensible" that Israeli leaders were being targeted alongside leaders of a prescribed terrorist group, Zionist Federation of Australia President Jeremy Leibler said.
Australian Jewish Association CEO Robert Gregory called for sanctions against the prosecutor and those who assisted him.
Opposition spokesman Simon Birmingham said the decision also jumped the gun ahead of domestic legal proceedings or internal investigations by Israel.
"Israel is a democracy with its own robust legal system," he said.
Simon Birmingham says the court's actions are premature. (Mick Tsikas/AAP PHOTOS)
Mr Ocampo rejected the argument that Israel's prime minister couldn't be a suspect simply because he presided over a democracy.
"The fact that you are a leader of a democratic country is not allowing you to commit crimes," he said.
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