Prime Minister Tony Abbott is poised to impose counter sanctions on Russia after Moscow announced a trade ban on Australian goods.

Russia must stop “bullying” Ukraine or face increased sanctions from Australia and its western allies, Prime Minister Tony Abbott has warned.

Russia on Thursday announced a 12-month trade ban on agricultural goods from Australia, the European Union, United States and several other western nations.

The tit-for-tat response followed tough sanctions imposed by Australia’s partners in the wake of Russia’s policy on Ukraine, which has faced political instability for months amid an internal conflict with Russian-backed separatists.

Australia has so far imposed about 50 minor sanctions.

It held off taking tougher action while Australian and Dutch police attempted to recover the remains and possessions of 298 people, including 38 Australians, killed when Malaysia Airlines flight MH17 was shot down over eastern Ukraine on July 17.

Now that Australian personnel have largely completed Operation Bring Them Home and returned to the Netherlands, Mr Abbott can consider more action.

“Russia is a big country trying to bully a small country,” he said, branding any Russian troop movement into Ukraine as an “invasion”.

“I say to President (Vladimir) Putin, if he wants to be regarded as a world leader, as opposed to becoming an international outcast, hold your forces back, stay behind the border and let the business of Ukraine be sorted out by the Ukrainians.”

Australia was still working on what further sanctions would be imposed, but Mr Abbott said they would be “strong”.

“The way to avoid increased sanctions is for Russia to call off what it appears to be in preparation for,” he said referring to an estimated 20,000 troops amassed on the Ukrainian border.

It was beyond doubt pro-Russian separatists armed with a Russian missile system were responsible for the downing of MH17 over Ukraine’s Donetsk region, Mr Abbott said.

Russia’s ban includes beef, pork, fruit and vegetable produce, poultry, fish, cheese, milk and dairy products.

Australia’s agricultural trade with Russia is worth about $400 million out of a total $736 million in merchandise exports.

Deputy Prime Minister and Nationals leader Warren Truss said Russia wasn’t a focus for Australia exports, unlike Asia.

“Russia has not been a reliable customer of Australia now for a very long period of time,” he said.

New free trade deals with Japan and Korea and a pending agreement with China should offset any gaps.

But Federal Agriculture Minister Barnaby Joyce said it would cause hardship for rural producers.

“We will try and work around it,” he said.

Opposition Leader Bill Shorten said Russia lacked the “moral authority” to impose sanctions.

“For the Russians to be talking about sanctions against us makes me sick in the guts,” he said, noting it happened on the same day as Australia was holding a memorial service for the domestic victims of MH17.

President Putin is due to attend a leaders meeting of the Group of 20 industrialised countries in Brisbane in November.

Mr Abbot has so far declined to ban him Putin from attending the G20 under Australia’s presidency.

Deputy Opposition Leader Tanya Plibersek said a ban wouldn’t achieve anything.

“Sometimes the best way … is to have someone in the room to say it to their face,” he said.

Economist Tim Harcourt said President Putin was unlikely to be flustered by further action.

“You poke a Russian bear with trade sanctions, you get clobbered,” he said.