Foreign Minister Penny Wong ordered the Israeli ambassador, Hillel Newman, to be called into the department over a video posted by far right Israeli national security minister Itamar Ben-Gvir, in which he insults and taunts detained members of the flotilla carrying aid for Palestinians.
Wong said on social media: "The images we have seen overnight are shocking and unacceptable".
The video shows the activists keeling with their heads on the ground.
A gloating Ben-Gvir says: "Welcome to Israel, we are the landlords."
"They came with much pride, as big heroes. Look, see how they look now, look. Look at how they look now. Not heroes and not anything, terror supporters. I tell Prime Minister Netanyahu: Give them to me for much more time. Give them to us for the terrorists' prisons. This is how it should look."
Among those detained are 11 Australians.
Wong said: "We condemn Israeli Minister Ben-Gvir - who Australia has sanctioned - and the degrading actions of Israeli authorities towards those detained.
"Australia's Ambassador to Israel made representations overnight to Israel, calling for the release of those detained and for Israel to ensure no ill treatment of any detainees and act in line with international obligations."
Benjamin Netanyahu has condemned the video. He said: "Israel has every right to prevent provocative flotillas of Hamas terrorist supporters from entering our territorial waters and reaching Gaza.
"However, the way that Minister Ben-Gvir dealt with the flotilla activists is not in line with Israel's values and norms.
"I have instructed the relevant authorities to deport the provocateurs as soon as possible."
Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
