The H5N1 strain of the flu has been confirmed in a northern giant petrel in Western Australia, near where the virus was found in the first detected case, involving a brown skua.
Agriculture Minister Julie Collins said there had been no evidence of mass mortalities among birds to date.
"We are working to determine whether or not the H5 bird flu has established in the wildlife or established in Australia, other than these two isolated birds," she told reporters on Monday.
Environment Minister Murray Watt said people should avoid contact with sick or dead birds.
"It is important to remember that at this point in time we only have two confirmed cases," he said.
"But we don't underplay the threat that this poses to wildlife and our agriculture sector in Australia."
More than a dozen cases of sick or dead birds have also been reported.
Despite there being no detections in commercial poultry, major chicken producer Inghams Group announced it had made a decision to mitigate against any potential risks across all WA sites.
"This includes the implementation of a complete lockdown, preventing all non-essential access, across all the company's WA farms and processing operations," the company said.
The meat producer is also seeking a regional housing order from the state government that would allow free-range poultry to be kept indoors.
Chief veterinary officer Beth Cookson said Australia had been preparing for the deadly avian flu for years as the only continent previously unaffected by the strain.
"Our actions at the moment are really to understand whether these two single individual birds have been able to spread it into other populations in Australia," Dr Cookson told ABC Radio.
"Our approach is to really learn from the overseas experience and look at the practical actions that can be put in place to mitigate the impacts as far as possible."
She said the two sick birds had a breeding habitat on the sub-Antarctic territories Heard Island and McDonald Islands, where the strain has killed 13,359 southern elephant seal pups.
Members of the public are urged to report any sick or injured bird they come across, but to keep their distance as the virus, on rare occasions, can spread to humans in close proximity.
The federal government has developed more than 100 response plans for key sites and vulnerable species and invested about $100 million in preparedness.
The discovery has fuelled fears among scientists, conservationists and agricultural groups, who point to mass mortality events and species-level population reductions overseas.
University of Melbourne researcher Michelle Wille said international experiences painted a gloomy picture.
"Everywhere this virus has emerged has been really catastrophic, with mass mortality events in wildlife, and in some places, we've seen species-level reductions in population," she said.
Industry impacts could also be significant, she said, noting more than 200 million chickens had been culled in the US since the virus arrived there.
10°C