The US group, the world's second biggest food maker, also laid off 151 staff in the country in January, when it closed a biscuit plant and moved production to China.
Kraft Australia said it wants to focus resources on its core brands and products such as the Vegemite, Peanut Butter, Philadelphia, salad dressings and processed cheese businesses, and place more emphasis on accelerating new product development.
It will move production of some of its niche products to the Middle East, where cheese is seeing double-digit growth.
"We are making important decisions which, whilst difficult, are crucial to the future growth and viability of the Kraft Australian business," said Chris Bell, director of the group's activities in Australia and New Zealand.
Kraft is carrying out a global restructuring drive in a bid to boost lagging growth. In February it announced a massive extension to its existing three-year restructuring plan, to get rid of 8,000 jobs and 20 production plants.
The manufacturer said the restructuring drive will be led by a "fewer, bigger, better" policy, concentrating on crucial brands that meet key consumer trends like wellness and convenience.
In Australia, where the group will lose a quarter of its workforce under the new plans, Philadelphia cream cheese will no longer be produced at the Strathmerton, Victoria plant but will be moved to the larger Philadelphia production plant in Suttontown, South Australia in early 2007.
The Strathmerton plant will also lose production of the cheese spread and canned cheese currently made for Middle East consumers when Kraft opens a new manufacturing site in that market.
At the grocery plant at Port Melbourne some smaller scale product lines will be transferred to Australian co-manufacturers or other Kraft plants by mid-2008, said Kraft, although Vegemite production will remain at this site.
Kraft Australia has also announced recently that it will outsource its warehousing activities to a third party logistics provider by the third quarter of 2007.
Unions and opposition party politicians criticized the jobcuts, especially as the company had received government funding in 2001 to set up its Asia-Pacific headquarters in Port Melbourne, and shared a $400,000 grant in 2002 to build a water pipeline in Strathmerton.