One Afghan interpreter was also killed. Two interpreters and two other ANA soldiers were wounded.
Australian forces - including some of those who were wounded - returned fire at the gunman, killing him.
The wounded were treated at the scene before being transferred by helicopter to a nearby medical facility for treatment.
"It is difficult to find the words to express our profound sorrow and sense of loss at this time," Hurley said in Perth.
The ADF has launched an investigation to determine whether the gunman from the ANA's 6th Kandak unit was a Taleban or terrorist infiltrator, or whether something else motivated his attack.
"It is critical we show restraint and reserve our judgments until the investigation is complete," Hurley said.
The Afghan army quickly ordered the disarming of all 200-plus local 6th Kandak personnel and confined them to their barracks.
The Australian soldiers were deployed to the Pacemaker base outside their usual operating area in Uruzgan Province to help train the 6th Kandak.
Little is yet known about the shooter but it is believed he had been in the force for some time and was not a new recruit.
Australia's roughly 1550-strong contingent in Afghanistan was in deep shock as a result of the attack, Hurley said. He conceded there would now be a period during which Australian soldiers would be apprehensive about their ongoing working relationship with the ANA.
"That will be quite natural," he said.
"I will be looking to the commanders in the field over there.
"They will need to work their way through this because very much at the heart of our mission is the mentoring and training of the Afghan national army."
Prime Minister Julia Gillard said it was a bitter day for Australia.
"It is an attempt by our enemy to strike at the core of our training and mentoring mission in Afghanistan," she said.
The nation had suffered very deeply in Afghanistan this year, with 11 soldiers killed.
"I am unbelievably conscious of that, I am unbelievably conscious of the suffering for families, of the sufferings of the nation as we see these losses," she said.
"I am also very conscious of the need to see the mission through."
But Gillard acknowledged that public support for Australia's mission in Afghanistan could be further damaged by the incident.
She urged Australians not to judge the progress of the mission on one incident.
"Despite the gravity of this incident, and the horror of this incident, we are making progress in training members of the Afghan National Army," she said.
"We can't allow our will to be undermined by the kinds of attacks that are aimed at corroding trust."
Defence Minister Stephen Smith said the motivation of the Taleban's "high-profile, propaganda-motivated" attacks was to reduce confidence and the political will for the conflict.
"If we were to leave now the Afghanistan/Pakistan border area would again become a breeding ground for international terrorism.
"Australians have been on the receiving end of international terrorism, whether that has been in Indonesia, in the United States, or in Europe," Smith said.
Thirty-two Australians have now died in the war and 209 have been wounded.
- AAP