Russian President Vladimir Putin could be banned from travelling to Australia for the G20 world leaders meeting as the Abbott Government looks to apply pressure on Russia over the shooting down of Malaysia Airlines Flight MH17.
Australia could also expel Russian diplomats and join the world in widening trade and financial sanctions against Moscow.
Mr Putin is due to travel to Brisbane in November along with US President Barack Obama, British Prime Minister David Cameron and Chinese President Xi Jinping for the annual global summit.
Asked on morning radio whether Australia could now "open its arms" to Mr Putin and allow him to attend the summit, Mr Abbott appeared to suggest he was open to placing a travel ban on him.
"Well, I just don't want to pre-empt what might happen down the track," he said.
"But, plainly, this is a matter of deep concern to the Australian Government and it ought to be of deep concern to the wider world because plainly, what's been happening in Ukraine for many months now is an attempt by Russia to bully a neighbour.
"Now this is just outrageous. It is absolutely outrageous. I don't say there are easy responses when a large and powerful country attempts to bully a smaller and less- powerful neighbour, but nevertheless it is an outrage and I think there's no other word to describe it."
Foreign Affairs Minister Julie Bishop confirmed the Government would discuss preventing Mr Putin from travelling to Australia at the National Security Committee meeting of Cabinet.
Opposition Leader Bill Shorten suggested Labor could support a ban on Mr Putin.
"Labor is prepared to support the Government, and co-operate with the Prime Minister . . . whether or not that involves anything to do with the G20, we say to the Government - we will work with your measured approach," he said.
Mr Obama was overnight facing perhaps the toughest decision of his presidency as pressure mounted for concrete action over the shooting down of Flight MH17 over Ukraine. As the world waited for an official US verdict on the cause of the crash, defence hawks in Washington were already warning that there would be "hell to pay" if Russia or its separatist proxies in eastern Ukraine were to blame.
Senator John McCain, the former Republican presidential candidate, warned that the US should consider providing significant military support to the Government in Kiev.
"If it was a missile that was launched either by Russia or the 'separatists' - which in my view are indivisible - this would have the most profound repercussions," he told CNN.
"It would open the gates, finally, for our assisting the Ukrainians. Giving them some defensive weapons, sanctions would have to be imposed as a result of that, and that would just be the beginning."
The near silence from the White House on who was responsible only served to highlight the enormous stakes in play for US-Russia relations.
In March, Australia placed limited financial and travel sanctions on Russia after Moscow annexed the Ukrainian territory of Crimea.
Travel and trade sanctions were placed on 12 unnamed individuals associated with the Russian Government.
But just hours before MH17 was brought down, Mr Obama announced expanded sanctions against Russia targeting two banks, energy companies and some defence companies.
This is a matter of deep concern to the Australian Government." Prime Minister *Tony Abbott *