Australian troops will remain in Iraq despite the continued instability following the Iranian missile attack on US-led military bases in the country.
Scott Morrison on Thursday said his government remained focused on ensuring stability in Iraq.
"We remain committed to carrying on this important work," Mr Morrison told reporters on Thursday.
Australia has several hundred troops deployed to Iraq along with a team of diplomatic staff.
Despite reports of a fresh rocket attack on Baghdad's heavily-fortified Green Zone, which houses government buildings and foreign missions. the Prime Minister said the situation in Iraq had stabilised overnight.
"That means we are in a position to continue to undertake the mission that we have set for ourselves in the Middle East and we remain committed to that, as do our other partners," he said.
Iran on Wednesday launched more than a dozen missiles targeting US forces in Iraq in retaliation for the killing last week of Iranian General Qassem Soleimani, raising concern about a wider war in the Middle East.
US President Donald Trump moved to de-escalate the growing crisis between the US and Iran in a public address on Thursday morning.
But while he won’t mobilise military forces – yet – the President has promised a “powerful” and “punishing” response to what was the most brazen direct assault on Americans since the 1979 seizing of the US Embassy in Tehran.
The US is immediately putting in place new economic sanctions “until Iran changes its behaviour”, Mr Trump said from the White House.
He called on other world powers to abandon the “defective” nuclear deal made in 2015.
“Iran must abandon its nuclear ambitions and end its support for terrorism. The time has come for the United Kingdom, Germany, France, Russia and China to recognise this reality,” the President added.
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Mr Morrison said he has discussed the unfolding situation in Iraq with the Canadian Prime Minister.
"We remain together and working together to ensure not only the safety of our own people, but to also ensure that we are in a position to continue to build a stronger Iraq," he said.
Green Zone attack
Iraqi military on Thursday morning reported that two rockets fell inside supposedly safe Green Zone in the country's capital.
Sirens sounded inside the Green Zone, with police sources saying at least one of the rockets fell 100 metres from the US Embassy.
"Two Katyusha rockets fall inside the Green Zone without causing casualties. Details to follow," the military said.
Two loud blasts followed by sirens had been heard in Baghdad, witnesses said.
There has been no immediate claim of responsibility.
Iranian state television on Wednesday said Iran had fired 15 ballistic missiles from its territory. The bases targeted were al-Asad air base and another facility in Erbil, the Pentagon said.
One source said early indications were of no US casualties, while other US officials declined to comment.
Iranian television said 80 "American terrorists" had been killed and US helicopters and military equipment damaged. It provided no evidence of how it obtained the information.
Germany, Denmark, Norway and Poland said none of their troops in Iraq were hurt. Britain, which also has personnel in Iraq, condemned the Iranian action. Iraq said its forces did not suffer casualties.
More than 5000 US troops remain in Iraq along with the other foreign forces in a coalition that has trained and backed Iraqi forces against the threat of Islamic State militants.