The embassy was closed in January 2008, apparently because of financial pressures.
Senator Carr on Wednesday confirmed that Pyongyang was seeking to reopen the mission.
"We would welcome the opening of an embassy," he told ABC Television.
"It would enable us to express our very strong concerns, our deep concerns, about what we see as a catastrophic position on human rights."
Senator Carr said North Korea operated a Gulag-like network of concentration camps.
Some 200,000 political opponents of the regime were being held in appalling conditions.
It was probably the "most systemic abuse of human rights you could find on the face of the planet", Senator Carr said.
Australia initially established diplomatic relations with the Democratic People's Republic of Korea (DPRK) in 1974.
The DPRK opened an embassy in Canberra in December 1974 with Australia reciprocating in Pyongyang in April 1975.
In November 1975, North Korea abruptly withdrew its diplomats and expelled the Australian mission.
Relations resumed in 2000 with the DPRK embassy in Canberra reopening in 2002.
Australia's embassy in Seoul represents Australian interests in North Korea.
Australia has long imposed sanctions over North Korea's nuclear tests.
Trade is negligible although Australia has provided humanitarian aid of around $5 million a year.