Indonesia's embassy in Canberra has closed after receiving a package containing bacteria.
Twenty two embassy workers have been put in quarantine
The incident comes amid Australian anger over the fate of Schapelle Corby, who was jailed for 20 years last week for smuggling drugs into Bali.
Australian Prime Minister John Howard apologised to Jakarta, saying many Indonesians would see the incident as damaging to bilateral relations.
He said the attack was "reckless" and would not help Corby's case.
Mr Howard said the package contained a quantity of the bacillus bacteria, and that more tests were being conducted.
"It's not an innocent white powder. It's some type of biological agent. I'm not a scientist but they say it belongs to the bacillus group and is being tested. I can't tell you any more than that," Mr Howard told Channel Nine television.
Most bacillus-type bacteria are harmless to humans, but one type - anthracis - causes anthrax in humans and animals.
Mr Howard said it was the first time a biological agent had been used in this way in Australia.
Corby maintained her innocence throughout her trial, and on Wednesday lodged an appeal. Opinion polls suggest 90% of Australians agree with her version of events.
The embassy said it had received a number of threats recently and had tightened security.
Correspondents say the street outside the embassy, which is home to several diplomatic missions, had been cordoned off by police by Wednesday afternoon.
Mr Howard said the attack showed "reckless indifference to human life".
"It will do great damage in the eyes of many Indonesian people to the relationship between our countries and it certainly won't help Schapelle Corby," Mr Howard added.
Foreign Minister Alexander Downer told parliament the embassy would have to shut for "some period of time" and 22 of its staff would remain inside the embassy in isolation for 48 hours.
Those who sympathised with Corby should put their energies into supporting her legal defence team, the foreign minister added.
"[They should] not put their energy into abuse and denigration of Indonesia, its institutions and its leaders and not undertake these sorts of activities, which are potentially threatening to Indonesian staff working here in Australia," he said.
Corby's case has stirred widespread public sympathy in Australia.
The 27-year-old beautician from Queensland has repeatedly said her luggage was tampered with, after she was arrested last October with 4.1kg of marijuana in her bags at Bali airport.
Many Australians now say they would boycott Bali, a destination desperately in need of tourists after the disastrous impact of the October 2002 bombing.
The Australian government has urged people to accept the verdict, but said it will supply lawyers to help Corby's appeal.