The organization cited the "high level of politically motivated violence during its elections, the organization said Tuesday.
"The committee has decided to suspend Zimbabwe from the councils of the Commonwealth for a period of one year with immediate effect," Australian Prime Minister John Howard told a news briefing.
That would mean that no Zimbabwean representative could take part in any Commonwealth meeting, but would not amount to full suspension from the organization.
Leaders of Nigeria, South Africa and Australia met in London to make the decision on behalf of the full Commonwealth, after South African President Thabo Mbeki and Nigeria's Olusegun Obasanjo met Mugabe and opposition leader Morgan Tsvangirai separately on Monday to propose that they form a coalition government or cooperate politically to tackle the country's economic and political crisis.
Tsvangirai earlier Tuesday rejected talks with Mugabe, saying "objective conditions" did not exist.
Also Tuesday, Switzerland said it had imposed sanctions on Zimbabwe, including a freeze on financial assets of government officials, in response to what it said was electoral "manipulation."
Police in Zimbabwe Tuesday warned the main labor federation against holding a three-day strike across Zimbabwe to protest the harassment of pro-opposition workers in the aftermath of last week's presidential elections.
The Zimbabwe Congress of Trade Unions called for the strike to begin Wednesday to protest harassment of labor groups aligned with the opposition Movement for Democratic Change, following last week's re-election of President Robert Mugabe, who has been in power for 22 years.
The opposition and several election observer groups have condemned the March 9-10 election as intentionally tilted to ensure Mugabe's victory over Morgan Tsvangirai, a former labor leader. Mugabe was declared the winner, with 56 percent of votes to 42 percent.
Speaking at a news conference after a meeting of the policy-making national council of his Movement for Democratic Change, Tsvangirai poured cold water on speculation he might enter a government of national unity with Mugabe.
"We arrived at the conclusion that the objective conditions do not exist for meaningful discussion because (the ruling) ZANU-PF is embarking on mass retribution against our members in the rural areas.
"We are beginning to have a refugee situation at the head office and our offices throughout the country," said Tsvangirai, who has labeled last week's disputed presidential election as "daylight robbery."
Industrialized nations of the Commonwealth had called for Zimbabwe's expulsion after Commonwealth election observers reported that the March 9-11 election did not adequately allow voters to freely express their choice. Other independent observer groups have said the poll was intentionally tilted to ensure Mugabe's re-election.
Police spokesman Wayne Bvudzijena said the labor federation had not sought police permission for the strike that is required under sweeping new security laws passed ahead of the elections in a bid to crack down on dissent.
The strike was also called to protest a breakdown in law and order, state-sponsored political violence, and the economic crisis gripping this troubled southern African country, said Wellington Chibebe who heads the grouping of trade unions.
The government was using repressive legislation to stop the federation from holding meetings in an effort to weaken the organization which represents 90 percent of organized labor in Zimbabwe, union officials said.
A meeting of the labor federation's general council, its policy body, was prevented Thursday by the police who said the group had not received permission under the new security laws.
The meeting, which was to have dealt with Mugabe's disputed victory in the presidential vote, could only go ahead if police attended, a condition labor officials rejected.
The security laws ban political gatherings of more than three people without police clearance.
In Berne, "The Swiss government has decided...that it is imposing sanctions against Zimbabwe. It has made this decision in view of the manipulation of the presidential elections and on-going human rights violations," the foreign ministry said in a statement.
Switzerland said it was following the lead of the United States and the European Union after both declared that the presidential election won by President Robert Mugabe earlier this month had been neither free nor fair.