Home Affairs Minister Tony Burke announced the controversial change, impacting subclass 600 visa holders, on Wednesday stating the measure gives the government time to assess the situation properly while still allowing flexibility in limited cases.
"There are many visitor visas which were issued before the conflict in Iran which may not have been issued if they were applied for now," Mr Burke said.
"Decisions about permanent stays in Australia should be deliberate decisions of the government, not a random consequence of who had booked a holiday.
"The Australian government is closely monitoring global developments and will adjust settings as required to ensure Australia's migration system remains orderly, fair and sustainable."
The changes were made possible due to legislative changes that passed parliament in March giving additional powers to the minister for home affairs.
Critics say the move is designed to prevent Iranians making onshore claims for asylum out of fear for their safety, like some members of the Iranian women's football team did earlier in March.
Greens senator David Shoebridge said about 7200 Iranians held temporary visas but had not yet arrived in Australia.
"Today, we see with 100 per cent clarity what the Albanese government thinks of the safety of the Iranian people as they shut the door on protection for people with a visa to come here," Senator Shoebridge said.
Exceptions to the changes, which will remain in effect for the next six months, include visa holders already in Australia or if they are the spouse, de facto partner, or dependent child of an Australian citizen, an Australian permanent visa holder, or an Australian resident who is not subject to a time limitation.
Parents of a child under 18 who is already in Australia will also be exempt and in limited cases a Permitted Travel Certificate may be issued to allow some Iranians still to enter Australia on a temporary visa.
Affected travellers who began their trip to Australia before the changes came into effect, including those who are transiting in a third country for less than 24 hours, will generally be issued a Permitted Travel Certificate and do not need to apply for a certificate in these circumstances.
Vice-president of the Australian Iranian Society of Victoria, Kambiz Razmara said the Labor government had generally acted with sympathy towards the Iranian community, but said often innocent people bore the fallout from "knee-jerk" changes.
"They have a very difficult job to do. We understand that they need to protect the borders and they need to react to what's happening." Mr Razmara told AAP.
"Innocent people unfortunately always get caught. We're in the middle of this."
Mr Razmara raised concerns with uncertainty over time frames for exemptions to be granted, including for people who might already be on the way to Australia.
"I don't see anywhere where there's time stipulations and what happens if that permit isn't given," he said.
Mr Razmara did not believe a large number of Iranians would be travelling to Australia for the purpose of seeking asylum.
"I don't believe with how we have treated people seeking asylum in the past, that there's any appetite for people to want to come out any more," he said.
He said the bigger concern for his community was potentially members of the Iranian regime travelling to Australia on temporary visas.
"The bigger risk is people ... who could be connected to the regime and who could act as foreign agents, influencing sort of actors in Australia," he said.
"You would hope that if innocent people are going to get burned at least the government stops cronies of the regime - who are killing people in Iran - from settling (in Australia)".
