Police had cordoned off the barnacle-encrusted object after it was discovered at Green Head about 250 kilometers (155 miles) north of the city of Perth late Sunday.
The Australian Space Agency said it was liaising with other space agencies to identify the object, which appears to be partly made of a woven material.
"The object could be from a foreign space launch vehicle and we are liaising with global counterparts who may be able to provide more information," the agency tweeted.
European Space Agency engineer Andrea Boyd said her colleagues believed the item that washed up from the Indian Ocean fell from an Indian rocket while launching a satellite.
"We're pretty sure, based on the shape and the size, it is an upper-stage engine from an Indian rocket that's used for a lot of different missions," she told Australian Broadcasting Corp.
Whoever launched the object into space would be responsible for its disposal.
"There is a United Nations Office for Outer Space Affairs, and they have an Outer Space Treaty that everyone has signed saying that whoever launches something into space is responsible for it right until the very end," Boyd said.
The Indian Space Research Organization did not immediately respond to a request for comment on Tuesday.
Western Australia Police said in a statement on Monday that a government chemical analysis had determined the object was safe and "there is no current risk to the community."
Authorities had earlier treated the device as hazardous and urged the public to stay away.
Police said the device would be removed following formal identification of its origin.
"Police will maintain security of the object until it is removed and members of the public are requested to stay away from the location," the statement said.
Some early media reports suggested the find might be part of Malaysia Airlines Flight 370, a Boeing 777 that vanished in the Indian Ocean in 2014 with the loss of 239 lives. But that theory was quickly discounted.
Curious locals had quickly gathered to pose for photos with the object on Sunday before police arrived.
Australian National University astrophysicist and cosmologist Brad Tucker said the object "definitely does look space chunky."
An upper-stage of a rocket could contain the carcinogenic fuel hydrazine, so bystanders should keep their distance, Tucker said.
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