HMAS Melbourne discovered the haul when crew boarded a vessel on Wednesday as part of a mission "in support of deterring terrorism and promoting peace and security in the maritime regions of the Middle East and Indian Ocean".
The navy said the material was tested and it returned a positive reading for heroin. A team from the frigate seized the drugs, took samples and destroyed the remainder.
Australian Commodore Daryl Bates said it was a blow for the funding of terrorist networks.
"During her time with Combined Maritime Forces, she has successfully disrupted a piracy attack, and conducted four successful narcotics seizures, seizing 23.8 kilogrammes of methamphetamines and now 353 kilogrammes of heroin.
"These seizures have severely impacted the funding network of those terrorist organisations that rely on these shipments for income."
Combined Maritime Forces is a multi-national naval partnership, which exists to promote security, stability and prosperity across approximately 2.5 million square miles of international waters.
