The Lowy Institute survey found 84 percent of respondents thought the US-led war in Iraq had done nothing to lower the threat of terrorism and 91 percent believed it had damaged the United States' standing in the Muslim world.
About two-thirds did not think the war, which the Australian government has strongly supported from its inception, would lead to the spread of democracy in the Middle East.
Some 85 percent of respondents said the Iraq experience should make nations more cautious about using military force to deal with rogue states.
The institute's executive director Alan Gyngell said the survey showed there was "pretty strong agreement" in the Australian community that the Iraq war had not worked.
"There's really no doubt now about what the Australian people think," he told public radio.
The survey was based on telephone interviews with 1,007 Australians in June and July.
Political response
Prime Minister John Howard said Australians should not consider "cutting and running" from Iraq, even if they still harboured doubts about his government's decision to involve the country in the war.
"There can be debate about the original decision to go into Iraq but common sense tells us that we must finish the job, and to pull out before Iraq is ready to look after itself will simply hand a massive victory to the terrorists and to the worldwide terrorist cause," he said in his weekly radio address.
"It is in Australia's interests that the terrorists fail both in Iraq and in Afghanistan -- that is the view that all common sense Australians take."
However Opposition foreign affairs spokesman, Kevin Rudd, said the Iraq invasion amounted to "a spectacular policy failure".
"My challenge to Mr Howard is to honestly admit that this Iraq episode, this Iraq adventure, is a mistake," he said.
Doctors call for Iraq withdrawl
Meanwhile doctors have called on the federal government to pull Australian troops out of Iraq, saying the cost is too great and the health system ill-prepared for a potential terrorist attack.
The Australian Medical Association for the Prevention of War, launched its campaign saying recent US intelligence which claimed the war had increased the global terrorist threat was cause for concern in Australia.
"We are concerned that all Australians are now at greater terrorist risk as a result of Australia's involvement in the Iraq war," said spokeswoman Dr Anne Noonan.
"We also know that Australia's health system could not cope adequately with a severe terrorist attack."
The ongoing cost, both to the economy and to troops, was also too great to bear, Dr Noonan said.
"More than 100 Australian troops returning from Iraq have already been medically discharged from the military, many for psychological trauma," she said.