The study supports a new decision to fortify all bread with iodine from next September to boost levels of the nutrient throughout the population.
Food Standards Australia New Zealand estimates just five per cent of people will still be deficient after that step - a dramatic drop from 43 per cent revealed in the latest national diet survey.
Deficiency rates were lower among children, with ten per cent of toddlers not getting enough iodine, but they were significantly higher among women aged 19 to 49.
Females in their child-bearing years need between 100 and 200 micrograms of iodine per day, but the study showed 70 per cent were falling short of the mark.
"Insufficient iodine intake, particularly in groups such as pregnant women, babies, and young children, is of great concern," said Parliamentary Secretary for Health and Ageing Senator Jan McLucas, who released the results.
Mild to moderate iodine deficiency can result in children having learning difficulties and can affect the development of motor skills and hearing. In extreme cases, children can be born with severe intellectual disability.
Senator McLucas said the findings confirm the need for mandatory fortification, requiring bakers to use iodised salt to make bread.
An original plan to require iodised salt in other foods was abandoned to avoid exposing children to too much iodine.
Folic acid, which prevents neural tube defects such as spina bifida, has already been been approved for addition to bread-making flour, also to take effect in September 2009.
The Australian Total Diet Study tested levels of the trace elements selenium, chromium, molybdenum, nickel and iodine in 96 types of food.
Most Australians had adequate dietary intakes of three of the other four nutrients, but levels of selenium, an antioxidant that helps prevent tissue damage, required further investigation.
