Australia will punish both Russian individuals and entities involved in the push into the Ukraine.
Australia will also follow the US in implementing financial sanctions on the Donetsk and Luhansk regions.
Ukraine has been fighting Kremlin-backed rebels in the two regions since 2014, and earlier this week Russian President Vladimir Putin signed a decree recognising them as independent states, drawing swift condemnation from the West.
Despite extensive confusion around what's actually happening on the ground, Australia's Prime Minister said 'the invasion of Ukraine has effectively already begun'.
"Russia is at peak readiness to now complete a full-scale invasion of Ukraine.
"And that is likely to occur within the next 24 hours and there are even reports already showing... things of that nature, which could indicate that it has already begun," he said.
He said Australia had 'always stood up to bullies' and labelled the country's recent actions 'unwarranted', 'unprovoked' and 'unacceptable'.
Morrison said he will continue talking with allies including the US, Britain and European nations on further measures which could be taken.
"The Australian Government will immediately begin placing sanctions on Russian individuals in response to the aggression by Russia against Ukraine," Morrison said.
"Initially, we will impose travel bans and targeted financial sanctions on members of the Security Council of the Russian Federation.
"These sanctions will significantly expand the scope of persons and I stress entities that Australia can list for targeted financial sanctions and travel bans."
Morrison stressed his issue was with the Russian Government and Putin - who has 'forgotten what democracy is - not the Russian people themselves.
"And I feel for the Russian people and there are many Australians of Russian extraction here who I know will be very disappointed by what President Putin is doing.
"They will feel strongly about that because that is not what they believe their country is about, that is not what their values are about or their heritage," he said.