Chief medical officer Brendan Murphy this afternoon announced that Australia was taking a "highly precautionary approach" and making the following new recommendations.
Contacts of any confirmed coronavirus cases now must be isolated in their home following exposure.
Returned travellers who have been in the Hubei province of China, not just Wuhan where the virus broke out, must also be isolated in their home for 14 days after leaving the area, other than seeking medical care.
"Given the substantially lower number of cases in China reported outside of Hubei province, we do not currently recommend self-isolation for travellers from other parts of China or from other countries," Murphy said.
"We are however closely monitoring the development of cases outside of the Hubei province and will update this advice if necessary."
He said the aim was containment of novel coronavirus and the prevention of person to person transmission within Australia.
Health Minister Greg Hunt said even if a person hadn't been in direct contact with someone who had coronavirus they should still self-isolate on returning to Australia.
"This makes Australia one of the most forward leading and one of the most cautious countries in the world," he said.
"We make no apology for that. Our job is to save lives and protect lives. Our job is to make sure above all else we're protecting the health of Australian citizens. With these decisions we have become one of the world's most cautious and conservative countries with the decisions we've taken."
Meanwhile, Prime Minister Scott Morrison has revealed the government is preparing to evacuate Australians from China's coronavirus-plagued Hubei province and quarantine them on Christmas Island.
"We have taken the decision this morning to prepare a plan for an operation to provide some assisted departures for isolated and vulnerable Australians in Wuhan and the Hubei province," Morrison said at a press conference in Canberra this morning.
"I stress there is a rather limited window here and we are moving very, very swiftly to ensure we can put this plan together."