Canberra's announcement means Gaddafi, members of his family and the regime's senior military and security personnel are prohibited from entering or transiting in Australia.
Foreign Minister Kevin Rudd, currently in Cairo, said Gaddafi and his entourage are also banned from engaging in financial transactions with Australians.
It comes after the bloody authoritarian response to the civil uprising in Libya and no sign that Gaddafi is willing to relinquish his decades-long dictatorship.
"The Libyan regime's use of violence against its people is deeply disturbing and completely unacceptable" Mr Rudd said in a statement.
"The time has come for Australia to reflect its grave concern by enacting these practical measures."
Julia Gillard also said Australian Consul-General Tom Yates and two other officials had been evacuated to Malta as Gaddafi's bloody crackdown intensified.
“As Prime Minister, I've got a duty of care to our consular staff and like other nations I formed the view that it was not safe to have them stay in Tripoli,” Ms Gillard told the Nine Network.
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