Ms Gillard said sustainability should be at the centre of Australia's future growth.
The new prime minister said her approach was different to former prime minister Kevin Rudd's view on the issue.
"I don't believe in a big Australia," Ms Gillard told Network Nine on Sunday.
"Kevin Rudd indicated that he had a view about a big Australia," Ms Gillard said.
"I'm indicating a different approach. I think we want an Australia that is sustainable.
"We should pause, we should take a breath, we should just get this right."
Australia should not simply hurtle down the track to a population of 36 or 40 million, Ms Gillard said.
If you spoke to the people of western Sydney, western Melbourne or the Gold Coast, they would agree, the prime minister said. But there were also some parts of the country facing skills shortages crying out for more people.
"We've got to get the balance right," she said.
A migrant herself, whose parents heeded the call to populate or perish, Ms Gillard said the right people were needed to fill the gaps.
"We'll still have an approach about getting the migration settings right, about meeting our needs for skilled labour," Ms Gillard said.
But a strong focus on training Australian people would remain.
Water and soil were important considerations as the nation's population grows, as was planning for transport, roads and infrastructure.
Population Minister Tony Burke would now be the minister for sustainable population, Ms Gillard said.
