Foreign Affairs Minister Marise Payne has called for Hong Kong police to respond "proportionately" to protesters who have paralysed parts of the city.
Vehicles and buildings have been torched and petrol bombs hurled police stations this week in some of the worst violence seen in five months of unrest.
Demonstrators are angry about the Chinese government meddling in the freedoms guaranteed under the "one country, two systems" formula put in place when Hong Kong returned to Chinese rule in 1997.
Senator Payne said she was "deeply concerned" by the increasing violence and urged the parties to find a solution that supports and upholds Hong Kong's freedoms.
The minister called for accountable law enforcement and the unbiased application of justice.
"It is crucial for all sides - police and protesters - to exercise restraint and take genuine steps to de-escalate tensions," Senator Payne said.
"It is essential that the police respond proportionately to protests."
Police said violence had reached a "very dangerous and even deadly level" and on Wednesday confirmed 64 people were injured in clashes
Hong Kong's Independent Police Complaints Council has limitations in its ability to oversee the police, according to an international expert panel.
They called for independent investigation into police responses to the protests, a recommendation which Senator Payne endorsed.
"These steps are essential for any meaningful dialogue and restoring the trust of Hong Kong's people," the minister said.
She emphasised Australia has a substantial stake in Hong Kong's success.
"The city is home to one of our biggest expatriate communities globally and our largest commercial presence in Asia," Senator Payne said.
Australian Associated Press