In 2020 the Department of Foreign Affairs and Trade issued 882,622 passports, compared with 2,208,767 the previous year.
It is understood that over the past 12 months, about 1.7 million Australians have delayed renewing an expired passport or delayed applying for their first passport.
Some Australians have chosen to keep their passport current in case they have an urgent compassionate need to travel.
Others have done so, in order to travel as soon as borders reopen.
Despite the downturn, the Australian Passport Office continues to receive about 10,000 passport applications per week and more than 14 million Australians, or about 57 percent of the population, have a passport.
The fall in valid passport numbers raises the possibility that the office will be swamped by applications when overseas travel is revived.
Australians are being advised that the time is right now to renew or apply for a passport as the processing times are shorter than normal.
However Aussies overseas might face a tougher process to renew their passport.
"Local restrictions are constraining our capacity to provide passport services overseas," the office's website reads.
"Some Australians overseas may find it hard to lodge passport applications. Staff at Australian diplomatic and consular missions are doing all they can to assist those most in need."
Qantas boss Alan Joyce this week pointed to international borders reopening in October, as Australia's vaccine roll out got underway.
But Finance Minister Simon Birmingham warned "there are many uncertainties between now and October".
He is hopeful Mr Joyce's target can be achieved but said more evidence about vaccine protection against emerging strains in the UK, South Africa and Brazil would be needed.
A 10-year Australian passport costs $A301.
