The Australian government is to close a section of its Irish embassy in a move described as "staff redeployment".
From October 1st, Irish people wishing to travel to Australia will have to apply to London for their visas. However, a small number of consular staff will remain in Dublin.
The Australian Department of Foreign Affairs and Trade said: "The move is being made for economic reasons."
Trade between Ireland and Australia has grown rapidly in the past 10 years, and is now worth about €600 million annually to the Irish economy.
Mr Peter Brennan, chairman of the Sydney-based Irish business network the Lansdowne Club, said the move would undoubtedly affect businesses. "There is a lot of money being invested by Irish companies in Australia. Surely it's common sense to try and increase the relationship, not to destroy it."
Several thousand Irish people travel to Australia annually, with many young people travelling on the hugely popular one-year working holiday visa.
The Australian Ambassador to Ireland and the Holy See, Mr Bob Halverson, will retire at the end of the year. It is understood that Dr John Herron, whose father came from Co Wexford, will replace him.