Australian troops and diplomats have been confirmed safe after Iran attacked coalition forces in Iraq.
“But it is obviously a very fluid situation,” Scott Morrison told reporters on Wednesday.
“We’re doing everything to ensure their continued safety.”
Defence chief Angus Campbell has been told to do whatever is necessary to keep Australians safe.
“I gave authority this morning, to do what was necessary and to take what actions and decisions were necessary to protect ADF personnel and diplomatic staff,” Mr Morrison said.
The prime minister has not ruled out withdrawing Australians from Iraq.
“We will continue to assess the situation,” he said.
“At this stage, it is a matter of protecting and defending those Australians where they are and working closely with our partners in the region.”
Iran has launched more than a dozen surface-to-air missiles on two US military bases in Iraq.
The rocket strikes were in retaliation for the killing of Tehran’s most senior military leader Qasem Soleimani.
US and allied forces at the Al-Assad and Irbil bases have come under attack.
Australian troops are located close to where the attacks took place.
“The government is closely monitoring the unfolding events in Iraq,” Mr Morrison said.
The national security committee of cabinet has been meeting since Saturday to review the situation in Iraq.
The committee is due to meet again on Thursday.
The prime minister has briefed Opposition Leader Anthony Albanese on the unfolding situation.
Mr Albanese has urged the United States and Iran to exercise restraint.
“I don’t want to see Australia drawn into a military conflict in the Middle East,” he told reporters in Adelaide.
“The first priority should be ensuring that Australians are kept safe.”
The Pentagon says it has taken “all appropriate measures” to safeguard its personnel and partners.
“These bases have been on high alert due to indications that the Iranian regime planned to attack our forces and interests in the region,” a US Department of Defense spokesman said.
“As we evaluate the situation and our response, we will take all necessary measures to protect and defend US personnel, partners and allies in the region.”
Mr Morrison learnt about the attack while flying from Canberra to South Australia to visit bushfire-ravaged Kangaroo Island.
He has spoken with General Campbell and minister Linda Reynolds about the rocket attacks.
There are reports “shelter in place” sirens have been heard at the Taji base in northern Baghdad, which houses Australian and allied troops.
Australia has hundreds of troops deployed to Iraq along with diplomats housed at an embassy in Baghdad.