On Wednesday Dubai police revealed that a woman and two men, holding apparently fake Australian passports, were among 15 new suspects in the killing of Mahmoud al-Mabhouh.
Smith said initial investigations conducted following the Dubai police announcement showed the Australian passports were probably "duplicated or altered".
He said Australia expected Israel to "co-operate fully and transparently" with its own investigation into the incident.
|Dubai police released passport photos of 15 new suspects in Mabhouh's killing [AFP]
Smith added that Australian officials had contacted the three passport-holders – Bruce Joshua Daniel, Nicole Sandra McCabe and Adam Korman - who all live in Israel.
"At this stage Australian officials have no information to suggest the three Australian passport-holders were involved in any way other than as victims of passport or identity fraud," he told parliament.
Australia's ambassador in Tel Aviv was also reportedly seeking a meeting with Israeli officials.
Dubai police strongly suspect Mossad, the Israeli spy agency, of carrying out the assassination in a luxury Dubai hotel where Mabhouh was found dead in his room on January 20.
"The new list of suspects includes people who offered prior logistical support and preparations to facilitate the crime, and others who played a central role," the emirate's police force said in a statement.
Investigators in the United Arab Emirates earlier said they had 12 British, six Irish, three French, three Australian and one German passports allegedly connected to the hit.
The latest suspects raise the total number of people believed to be involved in the murder to 26.
For its part, Israel has maintained there is no evidence of its involvement and has described calls from the Dubai police for the arrest of Mossad chief Meir Dagan as "baseless" and "absurd".
Britain's Sunday Times newspaper, quoting unnamed sources, has reported that Binyamin Netanyahu, the Israeli prime minister, authorised the mission and met members of the hit squad shortly before their departure.
Commenting on the new Australian links to the killing, Kevin Rudd, the Australian prime minister, said his country would "not be silent on the matter".
"If Australian passports are being used or forged by any state, let alone for the purpose of assassination, this is of the deepest concern and we are getting to the bottom of this now," he told public broadcaster ABC.
"We will not leave a single stone unturned."
Rudd said Australian officials had worked through the night after Dubai police named the new suspects.
"I am shocked, it's identity theft - simply unbelievable. I have been frightened and shocked since receiving the news"
Adam Korman, Australian living in Tel Aviv
Rudd said he had discussed the latest development "at length" with Smith, describing it as "a matter of the deepest concern to Australia".
The European Union has also voiced outrage over the use of fake passports after an earlier list of 11 people, including a woman, was released.
Israeli ambassadors in four European countries have been summoned for talks.
Israeli media reported that Australian-born Adam Korman, 34, who works in Tel Aviv, had already voiced "shock" at the news after being named as one of the passport-holders involved.
"I am shocked, it's identity theft - simply unbelievable," Korman told the Ynetnews.com website.
"I have been frightened and shocked since receiving the news," he added.
"It's irresponsible and a violation of human and individual rights to do such a thing."