Crowds of protesters marched on Parliament House on Saturday, shutting down streets around the capital and putting the territory's police on high alert, as they monitor the crowd with drones and helicopters.
Mr Morrison says the protesters are "speaking up for the things they feel strongly about" and asked them to follow police directions.
"Australia is a free country and they have a right to protest. I would ask them to do that in a peaceful and respectful way," he told reporters.
He said the federal government had only ever supported mandates for aged care and disability workers, as well as health workers in high-risk situations.
"All other mandates that relate to vaccines have been imposed unilaterally by state governments. They have not been put in place by the commonwealth government... so I understand their concerns about these issues," he said.
The protesters appear to be a mix of anti-vaccine activists, conspiracy theorists and people from the sovereign citizen movement.
One Nation senator Pauline Hanson visited the rally and spoke to some of the protesters in the crowd.
The protests are underway as the Australian Medical Association makes a bid to put hospital funding on the federal election agenda.
Launching the campaign in Perth, federal AMA president Omar Khorshid said public hospitals were in "logjam", with exhausted staff, long surgery waitlists, and emergency departments struggling to meet demand.
He said the campaign was "unashamedly political" and aimed to build a grassroots movement to press major parties into promising more health dollars ahead of the federal election.
"We are calling for all Australians to think about their health, think about the fact they may need a public hospital one day, they may need elective surgery, they may need to turn up to the emergency department," Dr Khorshid told reporters.
Meanwhile, the commonwealth has extended its pandemic emergency measures until April 17, due to the wave of COVID-19 cases of the Omicron variant.
Emergency requirements will continue, including restrictions on outbound travel for unvaccinated Australians and restrictions on cruise ships entering the country.
Other measures include implementing restrictions to protect remote communities in the Northern Territory and preventing price gouging of rapid antigen tests.
NSW announced a further 32 COVID-19 fatalities on Saturday, along with 8183 new virus cases.
Victoria has reported 19 more deaths for the 24 hours to Saturday and 7224 infections.
Queensland has 3660 new cases and 13 deaths, while the ACT recorded 428 cases and no fatalities.
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