Foreign Minister Alexander Downer made the plea in an interview with Aljazeera on Wednesday after an Australian task force arrived in Baghdad to work for the release of Douglas Wood.
"He is a road engineer who is in Iraq to help Iraqis ... he has a wife and son and three brothers ... we appeal to the kidnappers to free him and not involve him in politics.
"He was in Iraq just to help Iraqis," Downer added.
On Sunday, a DVD released by a group calling itself the Shura Council of the Mujahidin of Iraq showed Wood sitting on the floor, his hands cuffed, flanked by two masked insurgents brandishing automatic weapons.
He said he had worked on contracts awarded by the US military and then pleaded with US, British and Australian leaders to pull their troops out of Iraq.
A former employee of the giant US Bechtel corporation, Wood began to work for a small private company, John Watkinson, last year and has been in Iraq for more than a year.
Just weeks before his capture, Wood played down his concerns over working in Iraq. He told the Australian newspaper The Age the sounds of mortars dropping nearby - or rifle fire in the streets - was like "occasional background music".
"The reality is that it's not all that difficult. There are probably scarier places in downtown Washington DC ... . I don't feel afraid for my life here. There are incidents that are disturbing, but I've never been personally threatened."
Douglas Wood as he appeared on
1 May in a DVD sent to Reuters
And a spokeswoman for Australia's Department of Foreign Affairs and Trade told Aljazeera.net on Wednesday that there was no reason to question why a 63-year-old national with a serious heart condition would choose to work in Iraq.
"He had his medication, of course, he was fit enough to work in Iraq. But kidnappers are now putting him in danger - obviously he will not have access to the medical supplies he needs," the spokeswoman said.
While the Association of Muslim Scholars was unavailable for comment about their role in possible negotiations, an Iraqi Shia political party representative has advised the family to consider paying a ransom.
Muhammad al-Salami, the Australian representative of the Supreme Council of Islamic Revolution, said the family should "use every channel available".
Al-Salami added the family should enlist the help of senior Muslim clerics in Iraq to speak out and urge Wood's release. "They come [to Iraq] to build our country and they should be protected, not harmed," al-Salami added.