Australian Foreign Minister Alexander Downer has threatened to withdraw some visa privileges for Solomon Islands politicians, local media said.
Mr Sogavare became prime minister after riots in April
The threat came in retaliation for the Solomons' expulsion of Australia's top diplomat, in a growing row over a police investigation into April riots.
High Commissioner Patrick Cole was officially told to leave on Tuesday.
A senior Australian envoy is in the Solomons' capital, Honiara, to protest against the decision.
Mr Downer told Sky News that the government was seeking a measured response.
"We can't just have our High Commissioner expelled from the country for no good reason and then do nothing about it," he said.
He said that Solomon Islands' politicians, who at present can enter Australia on multiple-entry visas, may have to apply for a visa each time they want to visit.
The root of the disagreement is a police inquiry which Solomons Prime Minister Manasseh Sogavare has set up, to look into the April riots.
Critics accuse Mr Sogavare of initiating the police investigation in order to clear two lawmaker allies, who were charged with inciting the riots.
Australia's Prime Minister John Howard told Australian media on Wednesday that Mr Cole had been "doing the right thing - he was representing the interests of Australia."
"He's concerned about corruption in the Solomon Islands, he's concerned that the proposed commission of inquiry will subvert the legal process," he said.
The April violence erupted after an election won by the former deputy prime minister, Snyder Rini.
Thousands of anti-government protesters burned down buildings in the city's Chinese district, alleging that either China or Taiwan had paid lawmakers to vote for him.
Additional troops and police were sent to reinforce an Australian-led assistance mission already in the country to bring the violence under control.
Mr Rini resigned when several members of his government - including Mr Sogavare - defected to the opposition, and Mr Sogavare was elected prime minister.
The growing tensions between Australia and the Solomons could put at risk an international mission to keep law and order in the turbulent country.
"There is a big issue at stake here and we've put a lot of resources... there," Mr Howard told ABC News.
"We want the Solomon Islands to lift its game when it comes to issues of corruption and governance."