Political tension is building in the country ahead of the ruling Fretilin party's congress meeting later this week.
An estimated 20,000 people fled the capital, Dili after angry riots last month left at least five people dead.
The department says it is concerned that protests associated with Fretilin meeting could turn violent.
And it has warned Australians in the country to exercise caution.
Political tension remains high with the prime minister and Fretilin leader, Mari Alkatiri, likely to face a leadership challenge on Wednesday.
Australian warships will remain on standby off the coast of Timor in case any of the 800 Australians in Dili need to be evacuated.