The unpaid role will see the Dudley North MP work to forge strong business links between the UK and Israel, building on the countries' multi-billion pound annual trade.
Mr Austin now sits as an independent MP after quitting Labour over a "culture of anti-Semitism and bullying" under Jeremy Corbyn.
He said: "Trade with Israel is worth billions to Britain, it has resulted in investment and jobs in businesses across the UK, including here in the Black Country and in Dudley too.
“I’m looking forward to working with the Department for Trade and the brilliant team at our embassy in Israel who are working so hard to help British companies in Israel.”
Israel is one of the UK’s top 50 trading partners, with billions of pounds worth of trade between the two countries each year in vehicles, plant machinery, plastics and minerals.
Trading relations between the two countries is expected to become even more crucial after Brexit.
As well as Mr Austin's appointment, Lord Risby has been named as a trade envoy to Lebanon.
It takes the total number of trade envoys to 27 parliamentarians, covering 58 global markets.
International Trade Secretary Liam Fox, said: “The Prime Minister’s trade envoy programme is an unpaid and voluntary cross-party network, who support the UK’s ambitious trade and investment agenda in global markets.”