The move was a response to Pyongyang’s nuclear test last month, an Australian foreign ministry spokesman said.
The UN Security Council is expected to adopt a resolution later on Thursday to bring in tighter sanctions against North Korea.
North Korea first opened an embassy in Australia in 2002, but closed it in 2008 for financial reasons.
Ministry spokesman Patrick Low said there was still “some merit” in having a North Korean embassy in Australia.
“It would amongst other things allow us to communicate more directly with them on human rights,” he said.
Plans to reopen the embassy were however on hold “until further notice”, he said, while Australia worked with the UN Security Council on its response to North Korea’s nuclear test.
The nuclear test, North Korea’s third, followed its apparently successful launch in December of a three-stage rocket – a move condemned by the UN as a banned test of missile technology.
Pyongyang claims its nuclear test involved a smaller and more powerful device – prompting concerns it could be moving closer to creating a warhead small enough to arm a missile.
The UN Security Council will vote on a resolution to tighten sanctions on North Korea at 10:00 EST (15:00 GMT) today.
The resolution, which is expected to pass, was proposed by China and the US, and will impose sanctions that target North Korea’s diplomats, cash transfers, and access to luxury goods.
It will also impose asset freezes and travel bans on three individuals and two corporations linked to North Korea’s military.
They have been described by Washington’s UN ambassador Susan Rice as “some of the toughest sanctions” the UN had ever imposed.
Tensions in the region are very high following North Korea’s threat on Tuesday to scrap the 60-year armistice agreement that ended the 1950-53 Korean War, in response to both the UN sanctions move and military drills in South Korea.
South Korea has warned it will respond to any provocation from its northern neighbour, with whom it remains technically at war in the absence of a formal peace treaty.
Seoul also says it is closely monitoring military drills currently taking place in the North involving the army, navy and air force.