Kerry Nettle, a senator of the opposition Green party, said: "There are a number of instances of Russia transferring nuclear fuel and nuclear technology to countries such as Iran."
Greenpeace Australia also criticised the deal saying Russia's nuclear power industry was unsafe and the country had not ratified international agreements separating its military and civil nuclear programmes.
"The primary danger is that by supplying Australian uranium to Russia nuclear plants, it frees up Russia to do whatever it pleases with its own deposits"
Steve Shallhorn, chief executive of the environmental group, said that if Russia was able to use Australian uranium in its nuclear power plants, it could use its own uranium deposits for other purposes, including weapons production and exports.
"The primary danger is that by supplying Australian uranium to Russia nuclear plants, it frees up Russia to do whatever it pleases with its own deposits," he said.
Putin is in Sydney for the annual summit of leaders from the Asia-Pacific Economic Co-operation (Apec) forum.
Asked by journalists whether Russia could be trusted not to sell Australian uranium on to Tehran, Putin said his country already had an "excessive" supply of weapons-grade uranium that it was selling on the US market.
"If we have a need to sell uranium to other countries, our resources, our own resources, are sufficient,'' Putin said at a joint new conference with John Howard, the Australian prime minister.
Under a 1993 agreement, Russia has pledged to convert 500 tons of its excess enriched uranium - enough for an estimated 20,000 nuclear weapons - into low-enriched uranium to fuel American nuclear power plants.
Putin said Russia needed the Australian uranium to complete a planned expansion of Russia's nuclear power generating capacity, which envisages building 30 new nuclear power plants over the next 20 years.
"For these purposes, only for these purposes, we need Australian uranium," he said.
Howard said he was confidant that the Australian uranium would not be put to military use.
"This new agreement completely updated arrangements for nuclear safeguards for our country," Howard said.
Article 7 of the agreement says: "Nuclear materials, equipment and components which fall under this agreement are used only for peaceful purposes and will not be used to produce nuclear weapons or any other nuclear explosive devices, for research and development of nuclear weapons... or for any other military purpose."
Australia has the world's largest reserves of uranium, but has no nuclear power or weapons programme of its own.