Prime Minister Anthony Albanese upped Senator Payman's one-caucus suspension to an indefinite benching after she doubled down on her decision to cross the floor and vote in support of recognising Palestinian statehood.
Labor's policy platform includes recognition of a Palestinian state but with no timeline and some caveats attached.
Anthony Albanese's plan to spend the day talking about tax cuts has been thwarted. (Joel Carrett/AAP PHOTOS)
Senator Payman's defiance had derailed the government's plan to talk about tax cuts and cost-of-living relief, Mr Albanese said.
"Let's be very clear, it's not because of her support for a policy position that she's advocated," he told ABC radio on Monday.
"It's a day where we want to talk about tax cuts, we want to talk about our economic support
"Instead, you have seamlessly segued into the actions of an individual which is designed to undermine what is the collective position that the Labor Party has determined."
Senator Payman was welcome back into the tent if she accepted she could be a team player, he said.
Fatima Payman crossed the floor, defying a long-held Labor Party protocol. (Lukas Coch/AAP PHOTOS)
Mr Albanese criticised the Greens motion to recognise a Palestinian state, saying it did nothing to advance peace, but then chastised the minor party for not voting for a Labor proposal.
Foreign Minister Penny Wong attempted to amend the Greens motion.
The amendment would have added the suffix "as a part of a peace process in support of a two state solution and a just and enduring peace" to the push to recognise Palestine but was voted down.
The Greens motion couldn't be supported as it didn't affirm a two state solution, Mr Albanese said.
"And that's a collective position that Labor has had," he said.
Senator Payman maintained she voted in line with her "Labor values".
Anne Aly says the Greens motion on recognising Palestine statehood was "tokenistic". (Lukas Coch/AAP PHOTOS)
But the same values were embedded in Senator Wong's amendment, minister Anne Aly said.
"She could have voted for it if she, as she says, holds Labor values," she said.
"Had things been different, we may well have seen, we may well have seen the recognition of Palestine in the Senate."
Without adding the context of a two state solution made the Greens push "tokenistic", Dr Aly said.
"I don't want this to be tokenistic. I want this to be a very clear message to the Palestinian people that Australia supports their aspirations for statehood."
A defiant Senator Payman pledged to cross the floor again in support of Palestinian statehood, walking away from Labor expectations that members vote as a bloc.
In her eyes, the party was "rank-and-file members, are unionists, are phone bankers, door-knockers, life-long members of the party who put together the platform," Senator Payman said, adding she wouldn't resign from the party.
She insisted she wasn't a token diversity hire.
The war in Gaza has prompted weekly protests around the nation. (Morgan Hancock/AAP PHOTOS)
Mr Albanese said the senator was elected as part of the Labor Party, not an individual.
"She wasn't elected to the Senate because a quarter of a million West Australians put a number one next to her name, they put a number one in a box that said Australian Labor Party," he said.
The death toll in Gaza continues to mount, with some 38,000 dead, according to the local Hamas-run health ministry, following Israel's counteroffensive after the designated terrorist group killed 1200 people and took 250 hostages on October 7.
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