Police have revealed the caravan, found on Sydney's semi-rural outskirts on January 19, was "almost immediately" dismissed as a ruse carried out by organised criminals to further their own agendas.
The presence of industrial explosives in the van and a note listing prominent Jewish sites prompted Prime Minister Anthony Albanese and other leaders to declare the find an act of terrorism.
Mr Albanese on Wednesday defended his handling of the incident, saying the fact it was a hoax plot did not detract from the fear it created within the Jewish community.
"I have known for some time what the AFP thought and what the ASIO and security agencies thought about the events that occurred, including the caravan," he said.
"What I chose to do in spite of some of the media commentary and in spite of the criticism of the opposition, was to act in our interest, back the security agencies, back the Australian Federal Police and allow them to do their job."
Investigators on Monday revealed the caravan was a "criminal con job" carried out by low-level operatives for a mastermind looking to improve their own conditions.
NSW Police said it was part of a spate of anti-Semitic crimes in recent months, including graffiti and arson attacks on a synagogue, a preschool and other sites, arranged by organised crime figures rather than ideologically motivated actors.
The disclosure prompted a political war of words, including Opposition Leader Peter Dutton calling on the prime minister to explain when he knew the caravan plot was a hoax.
Labor figures accused Mr Dutton of deliberately avoiding briefings on the incident so he could continue his fiery rhetoric about anti-Semitic crimes.
Deputy Commissioner David Hudson told a NSW budget estimates hearing on Wednesday the possibility of terrorist motivations were discredited on February 21.
"The details of that (caravan criminal conspiracy) were complicated by external (media) reporting that entered the investigation ... until that was discredited, we treated it as a terrorist incident," he said.
A NSW task force investigating anti-Semitic attacks has arrested 29 people, including 14 in a recent sweep.
Police Minister Yasmin Catley confirmed during the fiery hearing that none of those arrested were believed to be ideologically motivated.
She repeatedly refused to answer when she knew it was not a foiled terror plot, while defending the introduction of hate speech laws which were rushed through state parliament on February 18 in response to rising anti-Semitism.
"Hateful crimes were occurring on our streets here in Sydney ... it does not specifically relate to the caravan event," Ms Catley said.
Australian Federation of Islamic Councils president Rateb Jneid said the misuse of serious incidents for political gain needed to end.
"Our political leaders must exhibit restraint and await thorough investigations before making public pronouncements that have the potential to cause community harm," he said.
The federation pointed to the introduction of hate crime laws "without proper verification of the facts" as an example of the impact of "hasty political responses".
Michael Zekulin, a terrorism researcher at the Australian National University, said the caravan find still highlighted a potential "blind spot" terrorists could exploit.
"It's good there is a lesson learnt here, that law enforcement uncovered something, but it doesn't negate that somebody acquired explosives undetected and was able to put this together," he told AAP.
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