The UK announced its ban on Tuesday, with leaders of France and Canada saying they would also take a stronger stance.
Israel has responded by closing the British consulate in East Jerusalem and banning almost a dozen politicians.
The prime minister told Question Time on Thursday Australia was "steadfast" in its commitment to a two-state solution to ensure peace for both Israelis and Palestinians.
"We are pursuing further targeted measures in coordination with our international partners to deter illegal settlements and deter settler violence," he said.
"Australia is not pursuing a blanket-style import ban. We do have concerns about the implementation of a blanket ban, and unintended consequences for Palestinians and groups that should not be targeted."
As part of joint action by the Australian, British, Canadian, New Zealand and Norwegian governments, two of Israel's most controversial ministers Itamar Ben-Gvir and Bezalel Smotrich, had travel bans imposed on them and their assets frozen in June.
Asked whether the federal government should have joined the UK in the ban, former prime minister Kevin Rudd said Australia has supported a two-state solution since the late 1940s.
"The most important thing for the Australian government to do is not to mimic anybody else," he told the National Press Club in Canberra.
"I know this government well enough ... they are fundamentally committed to a two-state solution approach."
Previously Australia's ambassador to the US, Dr Rudd in a speech on Wednesday evening said the "elevated possibility" of China under the leadership of Xi Jinping attempting to invade Taiwan as early as 2028 had jumped to about one in three.
"If you look at China's pattern of military and naval exercises, these some years ago ceased looking like exercises and began to resemble full-scale dress rehearsals," he told the NPC.
"What worries me most is the possibility of Chinese miscalculation about the degree of American resolve and a conclusion that they may have a unique opportunity before (20)28 to act."
Dr Rudd said Australia's response "should simply be to double down with the United States and friends, partners and allies on the deterrence equation".
