"According to diplomatic law and in response to Australia's action, the Islamic Republic has also reciprocally reduced the level of Australia's diplomatic presence in Iran," foreign ministry spokesperson Esmaeil Baghaei said, adding Canberra's ambassador, Ian McConville, had left Iran.
Australian Prime Minister Anthony Albanese said last week that operations at the Iranian embassy in Tehran were suspended and all Australian diplomats were safe in a third country.
Canberra's decision to expel Iranian ambassador Ahmad Sadeghi, its first such move since World War II, was the latest example of a Western government accusing Iran of carrying out hostile covert activities on foreign soil.
The Islamic Republic denies the Australian accusations.
"The accusation of anti-Semitism against Iran is ridiculous and baseless," Baghaei said, adding Tehran did not welcome the deterioration in bilateral relations with Canberra.
Iranian officials said Tehran's embassy in Canberra was continuing to provide consular services.
Albanese last week announced the expulsion of Iran's ambassador after Australian spy agency ASIO said it had "credible evidence" that the Iranian government directed at least two attacks on Jewish premises and was suspected of involvement in others.
Melbourne's Addas Synagogue was firebombed in December 2024 and Sydney's Lewis Continental Kitchen was hit with an arson attack in October the same year.
The government also moved to draft laws to list Iran's Revolutionary Guard as a terrorist organisation.
Iran denied the allegations through its foreign ministry spokesman Esmail Baghaei, who sought to link it to the challenges Australia faced with Israel after the government announced it was preparing to recognise a Palestinian state.
Tehran later said it would take an "appropriate decision" in response to Australia's action.
with AAP
