Yehuda Glick, of Israel's ruling right-wing Likud party, was speaking after a meeting with Foreign Minister Karin Kneissl during a visit to Vienna.
He said he also met Freedom Party of Austria (FPÖ) chief Heinz-Christian Strache earlier in the day, despite objections from the local Jewish community.
The Freedom Party's entry into government in December prompted Israel to say it would not have direct contact with FPÖ ministers, including Kneissl who was nominated by the party even though she is not herself a member.
Glick said the boycott had led to the "absurd situation" where the Austrian ambassador in Israel was able to freely meet ministers there while the foreign minister was boycotted.
"Many of the opinions about Mrs Kneissl herself and about the Freedom Party are prejudiced," Glick said, calling Kneissl "a true friend of Israel".
"I will do every effort I can to try to convince the Israeli foreign ministry of the importance of strengthening the relationship with all the parties in Austria," he said, while emphasising that he was not in Austria as an official representative of the Israeli government and did not want to meddle in Austrian politics.
Glick said that in his meeting with Strache he had stressed the importance of remembering the crimes of the Holocaust and stamping out racism and anti-Semitism, and that the FPÖ had a special responsibility to distance
itself from such ideas.
Strache promised that he would have a "direct channel" to raise concerns about any racist activity in the FPÖ, Glick said.
Glick also thanked Strache for expressing his opinion that Austria should move its embassy in Israel to Jerusalem, while recognising that he was now bound by the official Austrian government line.
Asked about the FPÖ politician Udo Landbauer, whose student fraternity was found to have published a songbook containing virulently anti-Semitic lyrics, Glick said he was "happy that this gentleman is not a candidate any more".
Landbauer resigned from the FPÖ after the revelations, while maintaining he had not known of the songbook's existence.
Israel suspended relations with Austria when the FPÖ first entered the government in 2000, eventually normalising relations again in 2003.
Strache, 48, has sought to soften the party's image and has visited Israel several times, the last time in April 2016 when he met members of Netanyahu's Likud.