Australian-born Croatia defender Josip Simunic will miss the World Cup after being banned for 10 matches by FIFA for his pro-Nazi chants that marred his country's play-off victory over Iceland last month.

Football's world governing body confirmed on Tuesday (AEDT) that Simunic's ban will start at the World Cup in Brazil, and that he will also be banned from entering the stadium for any of his country's matches.

The incident came after Croatia's World Cup qualifying play-off against Iceland in Zagreb on November 19, which Croatia won 2-0 to secure their place in Brazil.

The 35-year-old shouted "za dom" - Croatian for "for the homeland" - four times. In response, fans chanted "spremni", meaning "ready".

The chant was used by Croatia's World War II Ustase regime, allied to Nazi Germany, which killed hundreds of thousands of Serbs, Jews, anti-fascist Croatians, Roma and others in concentration camps.

A FIFA statement said: "The committee took note that the player, together with the crowd, shouted a Croatian salute that was used during World War II by the fascist 'Ustase' movement.

"As a consequence, the committee agreed that this salute was discriminatory and offended the dignity of a group of persons concerning, inter alia, race, religion or origin, in a clear breach of article 58 par. 1a) of the FIFA disciplinary code.

"After taking into account all of the circumstances of the case, and particularly given the gravity of the incident, the committee decided to suspend the player for 10 official matches."

The Dinamo Zagreb captain has also been fined $37,700 by FIFA.

Croatian Federation 'shocked' by ban

Croatia's Football Federation (HNS) said it was "shocked" over FIFA's "draconian sanction," warning the move could mean the end of Simunic's career in the national squad for which he played 105 times.

"Although we know that Simunic with his behaviour did not want to hurt anyone, by such a draconian sanction FIFA obviously wanted to send a strong message," HNS executive president Damir Vrbanovic said in a statement.

Vrbanovic said the HNS would "fully support our player in a likely appeal to (FIFA) decision."

Croatia coach Niko Kovac said he was "unpleasantly surprised, shocked and disappointed" by the FIFA sanction.

"I know him (Simunic) for a long time... and I am absolutely certain that he did not want to hurt anyone in any way," Kovac said in a statement.

Croatian prosecutors have already fined Simunic $5,000 for inciting racial hatred, adding that the player was aware that the chant symbolised the official salute of Croatia's totalitarian regime.

Simunic said at the time he was motivated solely by "love of my people (Croatian) and homeland".

"The thought that anyone could associate me with any form of hatred or violence terrifies me," he said.

"If anyone understood my cries differently, or negatively, I hereby want to deny they contained any political context.

"They were guided exclusively by my love for my people and homeland, not hatred and destruction."

Simunic was born to Croatian immigrant parents in Canberra.

He is among a number of Australian-born players who have opted for their ancestral home since Croatia joined the international football fold after independence from former Yugoslavia in 1991.

He started out at the NSL club Melbourne Knights before moving to German club Hamburg in 1998. He played in Germany for Hertha Berlin and Hoffenheim before joining Dinamo Zagreb in 2011.

He achieved notoriety at the 2006 World Cup in Germany playing for Croatia against Australia, where he was booked three times by referee Graham Poll - who failed to note the correct number of bookings - and finally red carded after the final whistle.

AFP / ABC