Monday marks the sixth day students have occupied the Arts West building at the University of Melbourne in Parkville.
More than 15,000 students across 474 classes have been affected and alternative arrangements were being made on Monday and Tuesday, the university said.
The building was closed on Friday following a safety inspection which found damage and obstructions to emergency exits, fire panel access and firefighting equipment.
Vice-chancellor Duncan Maskell on Monday issued a notice to protesters saying the demonstration had become "increasingly disruptive and unsafe".
"Camping is not allowed on university premises. Occupation of buildings is not permitted," he said.
"The university directs all persons occupying the Arts West building to leave the university's grounds and to remove all personal property from the building."
Students and staff contravening the order have been threatened with academic sanctions including expulsion, and may be referred to police for trespassing.
Student protesters say they have no plans to leave after failed talks with university leaders. (Joel Carrett/AAP PHOTOS)
Victoria Police Acting Assistant Commissioner Mark Galliot said the university has not asked police to intervene.
"If we are asked to do anything, (we want to make sure) any response is proportionate ... and if we do go in, there'll be negotiations with those protesters before any action takes place," he told ABC radio on Monday.
"At this stage, we do not want to act and the university doesn't want to act because they want to seek a peaceful resolution to what's occurring."
Pro-Palestine student demonstrators at La Trobe University are defying orders to dismantle their encampment and will hold a rally on Monday at the Bundoora campus after the deadline for removal of it ended on Sunday.
They are demanding the university not evict them, that no academic discipline be taken against student protesters and that the university cut all ties with engineering conglomerate Honeywell and Israel.
The university on Friday ordered the camp to be disbanded, citing the safety, wellbeing and amenity of campus users and visitors.
La Trobe student organisers said their protest was peaceful amid a pattern of universities attempting to "crush pro-Palestine encampments".
The University of Melbourne says more than 15,000 students have been affected by the protest action. (Con Chronis/AAP PHOTOS)
University of Sydney vice-chancellor Mark Scott has apologised to students and staff who feel unsafe on campus as demonstrators promised to continue their encampment, not ruling out moving inside like students in Melbourne.
But Mr Scott has not ordered the encampment to disband to avoid "going down the United States route" where universities and police tried to clear encampments, triggering "terrible violence".
"It embodies debate, discussion, free speech and protests that's always been part of university life," he told 2GB.
"If there's criminal action that takes place at the university, we will call the police."
Monash University protesters claimed their camp was "forcefully dismantled" on Friday, but the university said organisers had told them of plans to pack up the encampment.
Organisers of a pro-Israel camp at the University of Queensland voluntarily disbanded on Saturday after the university asked for all camps to be removed, but a pro-Palestine camp remains.
Student protesters at the Australian National University in Canberra have been told to leave or the university could consider disciplinary action.
