Australia barred its national team from travelling to Zimbabwe for a scheduled three-match tour in September to protest against Mugabe's rule, prompting Cricket Australia chief executive James Sutherland to suggest the world champions could play Zimbabwe at a neutral venue.
"That is wishful thinking ... the International Cricket Council says Zimbabwe can host the Australians and any other cricket country here," Zimbabwe Information Minister Sikhanyiso Ndlovu told reporters in Harare on Monday.
He said the move to cancel the tour and the Australian government's announcement that it was increasing funding for civic groups in the southern African country were part of efforts to ostracise and unseat Mugabe.
An Australian Department of Foreign Affairs and Trade statement released on Monday said Australia would significantly boost its support for human rights campaigners and community organisations in Zimbabwe over the next two years, starting with the immediate release of nearly Aus$6 million (2.5 million pounds).
The Australian government has planned to channel Aus$18 million by 2008 to Zimbabwean civic groups and aid agencies through the 'Australian Fund for Zimbabwe'.
"The Australian foreign minister has announced an Aus$18 million fund for regime change. We have a process here for the change of government through democratic elections and not any other way," Ndlovu said.
"For them to put up that money when we are heading for an election reveals their agenda, but we have a law here against foreign funding for political parties, directly or through NGOs or their embassy."
Australian Foreign Minister Alexander Downer had earlier told reporters Zimbabwe was unlikely to allow the match going ahead at a neutral venue.
"For them, I suspect, and at least for the Zimbabwean government, it would be seen to be humiliating to acknowledge that they're not able to play against the top cricket team within their own country.
"My guess is that this won't come about."
Australian Prime Minister John Howard said the government had taken the initiative to ban the players from touring because it was unfair to leave the decision to sportsmen.
"I'm sorry it has come to this. It really does pain me as a cricket lover. But this is a terrible regime," Howard said.
"This is a weapon available to the government. It is a device, it is a method of sending a very strong signal of disapproval."
A number of senior Australian players said they were relieved the government had taken the decision out of their hands.
Opening batsman Matthew Hayden said he had been thinking about a private boycott if the tour had gone ahead.
"I was seriously considering my position this time, as to whether I would go if the tour went ahead," Hayden told The Australian.