There are more than 1,500 Australian troops in Afghanistan
Australian Defence Minister John Faulkner has asked for recommendations on how to complete operations in Afghanistan as early as possible.
The announcement is seen as the clearest signal so far that Australia may withdraw its 1,500 troops deployed in Afghanistan earlier than expected.
The Australian review comes as the top allied general in Afghanistan has called for a large troops increase.
Australia has the largest non-Nato troop presence in the country.
The BBC's Nick Bryant in Sydney says the troop withdrawal could still be years away.
But he says Australia appears to be signalling that it will not send additional troops, following the call for reinforcements by Gen Stanley McChrystal, who heads US and foreign troops in Afghanistan.
Australia has confirmed that the soldiers it deployed to provide security during elections in August would stay for the presidential run-off next month.
"I've certainly asked the Australian Defence Force for any recommendations they have about ensuring we do complete that important role and responsibility both effectively, but in the shortest time-frame possible," Mr Faulkner told the Australian Broadcasting Corporation.
Mr Faulkner admitted that Australia's move would affect the push by Gen McChrystal.
"I've been discussing these issues with the chief of the Defence Force, Air Chief Marshal Angus Houston, and obviously it's a critically important matter for me," he said.
"I'm not going to talk specifically about the approaches we'll take but I do acknowledge that there will be impacts on the approach that Nato and Isaf partners will be taking as a result of Gen McChrystal's 60-day assessment."
The US commander warned last month that the war could be lost within a year without extra resources and President Barack Obama is considering boosting US troops by 40,000 to more than 100,000.
Later, Mr Faulkner told a parliamentary committee that Australia was not about to start drawing down its troop numbers immediately and would stay in Afghanistan until it can hand over to Afghan forces.
Australia has lost 11 soldiers in Afghanistan. Prime Minister Kevin Rudd insisted the country's commitment was "rock-solid" following the latest death in July.
However, Mr Rudd also admitted the war was "unpopular".
He sent an extra 450 troops in April, but last week said Australia would not follow Britain's move to provide another 500 armed forces.
About 100,000 international troops are deployed in Afghanistan.