Foreign Minister Marise Payne said Australia's embassy and operations in the Ukrainian city of Lviv have been temporarily closed, with officials deployed to eastern Poland and Romania to help other Australians leave the country.
"Australia stands in solidarity with Ukraine and continues to call on Russia to cease and reverse its unprovoked assault on its diplomatic neighbour," Senator Payne said in a statement on Tuesday.
"We continue to urge all Australians to leave Ukraine immediately, do not delay. The safety of Australians and officials is our highest priority."
It comes as Russian President Vladimir Putin deployed so-called "peacekeepers" into two breakaway areas of Ukraine that Russia now formally recognises as independent.
Senator Payne said the actions of Russia had no validity and undermined Ukraine's sovereignty.
"The Australian government is coordinating closely with the United States, United Kingdom, European Union and other governments around the world to ensure that there are severe costs for Russia's aggression," she said.
"Along with our partners, we are prepared to announce swift and severe sanctions that would target key Russian individuals and entities responsible for undermining Ukraine's sovereignty and territorial integrity."
As the United Nations convened an emergency meeting of its security council following the Ukraine developments, Mr Morrison said he hoped diplomatic talks would prevent further conflict.
"Some suggestions that (Russian troops) are peacekeeping is nonsense. They have moved in on Ukrainian sovereign territory," he told reporters in Tasmania.
"We cannot have threats of violence being used to seek to advantage a nation's position over others."
The prime minister said Australia would be in "lockstep" with other nations in imposing economic sanctions should there be further military action.
"Russia should step back, it should unconditionally withdraw, back behind its own borders and stop threatening its neighbours," he said.
"It's unacceptable, it's unprovoked, it's unwarranted, and Russia should understand that by seeking to invade another country, that this cannot advantage them, and it would seriously and significantly cost Russia."
The call for Russia to withdraw has been reiterated by Opposition Leader Anthony Albanese.
The Labor leader said Australia stood in solidarity with Ukraine.
"There is no place in 2022 for nation states to just try to carve off sections of another sovereign nation state, which is what we're seeing here," he told reporters.
"This unilateral statement by Vladimir Putin has no place in a world in which we have respect."
The head of Ukraine's diplomatic mission in Australia Volodymyr Shakivskyi said the situation in the country was deteriorating rapidly.
"We still hope that we can find a way out of this situation. As every nation, we would like to have peace and avoid a worst-case scenario," he told ABC Radio.
"We believe the chances for the peaceful resolution is going down."
Mr Shakivskyi described Russia's actions as a blatant violation of international law.
"This is a new development and it's really difficult to predict for sure how things will unfold further," he said.
"There is no military solution for Ukraine, Ukraine will only rely on political and diplomatic measures to bring those territories back."
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