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.
"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.
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 that Australia would not hesitate to impose more sanctions if Russia escalates the situation further.
Prime Minister Scott Morrison had promised on Wednesday to "ratchet up" the response should military action continue.
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 told reporters in Sydney.
Meanwhile, Russia's ambassador to Australia, Alexey Pavlovsky, met with the secretary of the Department of Foreign Affairs on Wednesday afternoon following announcement of the sanctions.
Mr Morrison, who convened cabinet's national security committee on Wednesday, said Russia needed to understand the world's condemnation of its decision.
"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 informing him of the sanctions.
A spokesman said 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," the 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 Russian invasion 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