Alan Morison and his colleague Chutima Sidasathian are being accused by a military officer of damaging the Thai Navy's reputation and of breaching the country's Computer Crimes Act.
Mr Morison edits the news website Phuketwan.
If convicted the pair face jail terms of five years and two years respectively.
"The MEAA expresses its deep concern for the journalists involved in this allegation and calls on Thai authorities to drop any charges against them," said MEAA federal secretary Christopher Warren.
The pair have been called to give a statement before police on Tuesday.
The allegations of misconduct stemmed from Thai Captain Panlob Komtonlok of the Third Naval Area Command that oversees the Andaman Sea coast, the MEAA said in a statement.
Recent reporting by Phuketwan contained a paragraph carried from a Reuters article that was critical of the Thai authorities in their handling of the Rohingya ''Boat People'' issue.
''We were shocked and surprised when we were sued by the Royal Thai Navy, especially given that all we did was carry a paragraph from Reuters,'' Mr Morison told AAP from his home on Phuket on Monday night.
''The two Reuters journalists who wrote the original report are going to be charged under the same law, and basically it's a matter of the reputation of the Thai navy seemingly being more important than the treatment of Rohingya.''
A Reuters spokesperson said in a statement: ''Our story was fair and balanced and Reuters has not been accused of criminal libel.''
Mr Morison said the Computer Crimes Act was a rarely used law, but it had been used recently to curtail human rights and free-speech campaigners.
A spokeswoman for the Department of Foreign Affairs confirmed that Canberra was aware of the case.
''Embassy officials in Bangkok are providing consular assistance to an Australian man who has been called to give a statement,'' she told AAP.
Human Rights Watch has attacked the legal action, calling it an attempt to stifle reporting.
''The Thai navy's lawsuit is a reckless attempt to curtail journalists reporting on alleged human trafficking by its officers,'' the group's Asia director Brad Adams said in a statement.
But Mr Morison said he believed the suit may stem from a simple mistranslation of his website's English-language article into Thai.
The Royal Thai Navy could not be reached for comment.