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The confirmation came from Amsterdam Airport after the Berlin-based DPA agency said there were 27 Australians and 143 Dutch on board.
Other passengers included 20 Malaysians, 11 Indonesians, six from the UK, four each from France and Germany and one from Canada.
Some infants were also onboard.
Officials also said there were passengers from Belgium and the Philippines.
MH17 was carrying 295 people, including 15 crew, from Amsterdam to Kuala Lumpur when it crashed in rebel-held east Ukraine in what has been called a "terrorist" attack.
Prime Minister Tony Abbott said if the plane was deliberately brought down then it was an "unspeakable" crime.
"We are profoundly concerned at reports the flight may have been shot down," he told local television.
"If this is a crime rather than an accident, well it's unspeakable crime."
The Ukraine area where the plane went down is at the centre of an ongoing separatist dispute.
Ukraine's government and pro-Russian insurgents have traded blame for the disaster, with comments attributed to a rebel commander suggesting his men may have downed MH17 by mistake, believing it was a Ukrainian army transport plane.
Debris stretched for kilometres in the area near the Russian border, with the jet's tail marked with the Malaysian Airlines insignia laying in a corn field, and insurgent fighters and fire trucks nearby.
"There's no doubt the plane was shot out of the sky," Federal government frontbencher Christopher Pyne told Nine Network.
The Department of Foreign Affairs and Trade earlier said it had "grave concerns" that a number of Australian were on board MH17.
A hotline - 1300 555 135 - has been set up for friends and family to call for information.
International broadcasters are showing footage of what appears to be an Australian passport picked up amongst the wreckage although there is no official confirmation of the finding.
Qantas has confirmed it didn't have any code share passengers aboard the flight MH17.
A spokesman for Qantas told AAP the airline did not have a code share with that flight.
"There is no change to Qantas operations as a result of the Malaysia Airlines incident," Qantas said.
The carrier does not have flight routes tracking near or over the area where MH17 went down.
In Kuala Lumpur, Malaysia's Prime Minister Najib Razak said the world was united in grief over the incident.
He had spoken to his Dutch and Ukrainian counterparts and US President Barack Obama about setting up an investigation.
They agreed that no one should interfere with the wreckage zone or remove any debris including the black box.
The Ukrainian president confirmed there will be negotiations with rebels in the east to establish a humanitarian corridor to the crash site.
"Authorities believe the plane was shot down but at this stage however Malaysia is unable to verify the cause of this tragedy," Mr Najib told reporters.
"No stone will be left unturned."
Mr Najib said if the reports were true the perpetrators should swiftly be brought to justice.
He confirmed Malaysian authorities did not receive a distress call from the plane.
"This is a tragic day in what has already been a tragic year for Malaysia," Mr Najib said a reference to flight M370 which disappeared in the Indian Ocean in March and has not been found.
"Today, regardless of nationality, we are all united in grief."