Iranian President Mahmoud Ahmadinejad announced yesterday his order for Iran's atomic chief to begin raising uranium enrichment to 20 per cent.
Mr Smith said this was a "serious provocation" and a clear breach of UN Security Council resolutions.
"Iran's continued provocations and refusal to engage in meaningful dialogue risks testing the patience of the international community," he said in a statement.
Mr Smith said Iran needed to suspend its uranium enrichment activities as required by the UN Security Council and cooperate fully with the International Atomic Energy Agency to resolve issues with its nuclear program.
"Iran must understand that the international community will not wait indefinitely for Iran to fulfil its international obligations," he said, adding Australia remained committed to a diplomatic solution.
Australia imposed additional autonomous sanctions against Iran in October 2008.
Prior sanctions were imposed on Iran under UN Security Council resolutions 1737, 1747 and 1803.
