Foreign Minister Marise Payne says it is an "obscene perversion" for Russian President Vladimir Putin to speak of Russian soldiers acting as "peacekeepers" in Ukraine.
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"Any suggestions that there is a legitimate basis for Russia's actions are pure propaganda and disinformation," Senator Payne told reporters during a visit to the Czech capital Prague after Russia recognised the separatist regions of Donetsk and Luhansk as independent territories.
Mr Putin has signed a decree on the deployment of troops to the breakaway enclaves in eastern Ukraine in a move he says is aimed at keeping the peace.
"The assertion by President Putin of Russian soldiers acting as peacekeepers is indeed an obscene perversion of the noble and vital role that generations of peacekeepers have played across the world," she said.
Senator Payne added Australia would not hesitate to impose more sanctions if Russia escalates tensions.
Overnight on Wednesday, Ukraine declared a state of emergency and told its citizens in Russia to leave while Russia began evacuating its embassy in the capital of Kyiv in the latest signs that a full-scale Russian invasion could be imminent.
The head of the Ukrainian mission in Australia, Volodymyr Shalkivskyi, told Nine Network on Thursday his country is on full alert.
"A full-scale invasion is possible. There is still the movement of Russian troops along our borders and, actually, build-up of those troops. We are getting ready," he said.
"There is still room for negotiations and we keep that door open."
Asked if he thought sanctions imposed by the US, and others including Australia, would deter Mr Putin, Mr Shalkivskyi "you cannot use kind of normal logic when you consider the actions of Mr Putin".
"(Russia) has military superiority over Ukraine, it has nuclear weapons, at least, in their possession," he added.
"But the consequences of full-scale invasion might be very dramatic for the entire world because, well, first of all, it's not going to be a one-day invasion. Ukraine will resist."
Prime Minister Scott Morrison promised on Wednesday to "ratchet up" Australia's response to the crisis.
Australian sanctions and travel bans will target eight members of the Russian Federation's security council while existing sanctions in place over past aggression will be expanded.
Russian banks have also been targeted.
Mr Morrison said he expected further tranches of sanctions against more individuals but remained tight-lipped about who would be targeted.
"We will take this step by step and I can assure you those steps will get stronger and stronger," he said in Sydney.
Meanwhile, Russia's ambassador to Australia, Alexey Pavlovsky, met with the secretary of the Department of Foreign Affairs on Wednesday afternoon following the announcement of the sanctions.
Mr Morrison, who convened cabinet's national security committee earlier in the day, said Russia needed to understand the world condemned its actions.
"The invasion of Ukraine has effectively already begun. They're acting like thugs and bullies," he said.
"Australians always stand up to bullies and we will be standing up to Russia."
About 430 Ukrainian visa applications will jump to the top of the pile and the more than 1000 Ukrainians outside Australia who already have visas are being welcomed back, Mr Morrison said.
It is believed up to 1400 Australians remain in Ukraine, with 184 registered for embassy support, which is currently being run out of Poland.
"Ukrainian visa holders who wish to remain in Australia beyond the validity of their current visas are able to apply for further visas for which they may be eligible," a Department of Home Affairs spokesman said.
"Australia does not return individuals to situations where they face persecution or a real risk of torture, cruel, inhuman or degrading treatment or punishment."
Mr Morrison spoke with his Ukrainian counterpart Denys Shmyhal on Wednesday night to inform him of the sanctions.
Mr Morrison told Prime Minister Shmyhal that Russia's behaviour towards Ukraine was "unacceptable, unprovoked and unwarranted".
"Prime Minister Morrison reaffirmed Australia's unwavering commitment to Ukraine's sovereignty and territorial integrity," a spokesman said.
"The prime minister affirmed Australia's preparedness to do more, working with our partners, and in response to Ukraine's needs."
Australia has ruled out direct military assistance and is supporting Ukraine's cyber capability.
Opposition Leader Anthony Albanese, who has been briefed on the situation by intelligence agencies, said the arrival of Russian "peacekeepers" in Ukraine was a shocking development.
"Labor supports the announcement made by the government - we believe it is important when it comes to national security that we express a common view on behalf of the Australian people," he said.
"What we see with ongoing intimidation against the people of Ukraine is aggressive Russian action which undermines security in the region and indeed the world."
with reporting from Reuters
Australian Associated Press