Australia has a three-stage plan to relax its long-standing sanctions against Zimbabwe.
Foreign Minister Bob Carr says the federal government wants to peel back its sanctions, which include travel and financial restrictions against 153 individuals and four entities, and an arms embargo.
But he says the Zimbabwean government must first set a date for a constitutional referendum, hold that referendum and then stage free and fair elections.
"We're eager to do it. I want normal relations with Zimbabwe," Senator Carr told reporters in Canberra on Thursday.
Mr Tsvangirai formed a power-sharing government with the Mugabe, now aged 88, in 2009. He called on Australia to suspend its sanctions against his country when he visited Canberra in July last year.
Zimbabwe failed to hold a promised constitutional referendum last year. It's due to hold general elections later this year.
Senator Carr also confirmed he has been lobbying the European Union to lift its sanctions against Myanmar, formally known as Burma.
Senator Carr says the EU's current sanctions suspension did not give potential investors enough certainty.
"We want to see that investment, ethical investment, in the country," he said.
"We want Myanmar to get on that trajectory of economic growth."
But the Australian Greens warned that Senator Carr's stance was dangerous, given how far Myanmar still had to go down the road of democratic reform.
"Unless the persecution of ethnic minorities ceases and until there is a free and fair general election in Burma, the indecent rush to squeeze profit out of the country will serve to actively encourage repression and the abuse of power," Senator Scott Ludlam said in a statement.