The Caltex Socceroos have risen two more spots in the latest FIFA rankings released on Thursday, the first of 2018.
After sitting 38th in the rankings in December, Australia are now up to 36th despite not playing a match since their Intercontinental Playoff win over Honduras in November.
Iran remain Asia's top-ranked team despite dropping two positions, to now sit just above the Caltex Socceroos at 34th.
Japan (56), Korea Republic (59) and China (70) were the next best of the AFC nations, all moving up one spot.
Fellow Asian nation Kuwait were the biggest movers of the month, up 15 spots to 174 in the world.
The Caltex Socceroos’ opponents at this year’s FIFA World Cup in Russia remain near the top of the rankings.
France sit inside the top 10 at ninth, with Peru two spots further back at 11 and Denmark are 12th.
Australia’s opponents in March’s friendly Norway are 58th.
Elsewhere, world champions Germany held on to top spot, ahead of Brazil, Portugal and Argentina.