Prime Minister Malcolm Turnbull is cautiously optimistic about the possibility of renewed talks between North Korea and the United States, but has urged world leaders to continue imposing economic sanctions on the rogue nation.
A South Korean delegation hinted at possible talks between US officials and Pyongyang after returning from a first-ever meeting with North Korean leader Kim Jong-un earlier this week.
US President Donald Trump believes North Korea is "sincere" in its willingness to suspend nuclear tests while it engaged in talks.
Speaking to a business summit in Sydney on Wednesday, Mr Turnbull said the world had seen promising signs from the Korean peninsula previously, only for negotiations to fall apart.
"We have had these glimmers of light before, only to be disappointed," Mr Turnbull said.
"The one thing that we must be very clear about, is there must be no relenting in the economic sanctions against North Korea."
Mr Turnbull said it was his view, and those of Australia's allies, that tough economic sanctions were the only way to leverage North Korean denuclearisation.
"That's the only lever we have short of obviously catastrophic consequences of conflict," Mr Turnbull said.
President Trump said "for the first time in many years, a serious effort is being made by all parties concerned," in a tweet overnight.
"May be false hope, but the US is ready to go hard in either direction!"
Australian Associated Press