But Prime Minister Scott Morrison says the most likely retaliation against Australia would be cyber attacks, as malicious cyber activities against Ukraine continues alongside Russia's military build-up on the border.
Mr Morrison urged Australian businesses to immediately review and adopt enhanced cybersecurity measures such as malware detection, mitigation and response.
"It's an issue in which we need to be constantly vigilant," he told reporters in Sydney on Thursday.
The prime minister said the federal government had put in place laws, regulations and capabilities to ensure it is able to work with the private sector to counter any attacks against critical infrastructure like banks and telecommunication networks.
"We set up the critical centre, we reformed investment rules and put the tools and enforcement sanctions in place, we called out malicious cyber activity by state and non-state actors and we built our capability through our investment in the Australian Cyber Security Centre," he said.
"Dealing with cybersecurity threats is a constantly escalating task. That job is never complete."
However, Defence Minister Peter Dutton said Australia was already dealing with multiple cyber threats.
"Not every Australian sees it every day, but Australia's already under attack in terms of the cyberattacks that we deal with each day," he told Sydney radio 2GB.
"(They are) trying to stop our banks ... trying to stop our energy networks, our NBN, our telecommunications, businesses are held to ransom. This is the reality, and we can't pretend that if we don't say anything, that these people will go away."
Independent senator Rex Patrick told the ABC if tensions continued to escalate, Australia should remove Russian diplomatic staff from the country to counter any intelligence offensives they're conducting.
"We heard the prime minister talking about cyberattacks. If there's any further escalation, we should be expelling the Russian ambassador... and indeed senior officials," he said.
"That will have the effect of sending a message but also will obstruct any intelligence operations being carried out by (Russia) here in Australia which undoubtedly there are those sorts of operations being carried out."
But Mr Morrison said he would continue to rely on intelligence from Australia's top security advisers.
"I've seen the commentary that has come from others who don't sit in national security committees of cabinet and don't have the benefit of the intelligence and advice and information of the staged responses the government is engaged in," he said.
"They're at liberty to make their contributions and comments but I would simply say that Australia will continue to take a very careful, strategic and staged response to this crisis."
