Scott Morrison says his government is closely monitoring the "very sensitive, very concerning" tensions in Hong Kong.
The prime minister's comments came as Taiwan's minister of foreign affairs Joseph Wu told AAP the situation was "worrisome" and urged China not to intervene.
Mr Morrison said Australian officials were focused on de-escalating tensions between pro-democracy protesters and Chinese authorities.
About 100,000 Australians are estimated to be living in Hong Kong with a further 10,000 visiting at any one time.
"So this is obviously something we're watching closely, we're monitoring the situation," Mr Morrison told reporters in Tuvalu on Friday.
"But right now, efforts are to de-escalate tensions."
As thousands of Chinese troops gather across the border from Hong Kong after weeks of unrest and protests, US President Donald Trump and others have called for calm.
"We simply want to see the tensions de-escalate there and so people can just go on about their peaceful lives," Mr Morrison said.
The prime minister would not be drawn on the potential ramifications if the protests escalate into full-blown violence.
"Largely that's a matter that has to be resolved internally in Hong Kong itself and more broadly within China."
Australian travellers planning trips to Hong Kong are being encouraged to exercise a high degree of caution.
Meanwhile, Dr Wu said the Hong Kong situation was "very worrisome", given the legitimate concerns for more freedom and democracy.
"It looks like the Chinese are preparing to intervene with their armed police and if that happens that would be most unfortunate," the Taiwanese foreign minister told AAP on the sidelines of the Pacific Islands Forum in Tuvalu.
"What we would urge is for China not to intervene, for China to sit down and think about the future development of Hong Kong and what's been denied to the people in Hong Kong - freedom and democracy, elections.
"We are very nervous in watching the situation."
He said any request for humanitarian assistance from Taiwan would be done in line with its existing legal framework.