Australian Prime Minister Julia Gillard says the decision by Qantas to ground its entire fleet could have implications on the economy, adding that Australians want to see the issued "sorted out".

Earlier, Transport Minister Anthony Albanese said Qantas had informed the Government of its plans about 2pm - just a few hours before announcing the grounding.

All Qantas employees involved in industrial action will be locked out from 8.00pm Monday, and thousands of passengers have been left stranded.

The Government has made an urgent appeal to Fair Work Australia to halt all industrial action at the airline.

Ms Gillard told reporters an application was rarely made but in this instance it was warranted.

"I believe it is warranted in the circumstances we now face with Qantas ... circumstances with this industrial dispute that could have implications for our national economy," she said.

"This dispute has escalated in a dramatic way. I believe Australians want to see this sorted out.

"We do need this dispute brought to an end."

But Opposition Leader Tony Abbott said the Government's position was compromised because of its links to the unions involved.

He said the Government had been procrastinating for weeks and it was urgent the dispute was solved immediately.

"This is in the end a test of competence for this government," he told reporters in Melbourne.

He said the stand-off could be disastrous for the country overall if it is not resolved quickly.

"There's going to be massive public inconvenience, there's going to be massive disruption to business and there's going to be a very big hit on Australia's international reputation because Qantas really is around the world, to a considerable extent, the face and the symbol of Australia," he said.

Independent Senator Nick Xenophon has described Qantas' action as "militant management".