The invasion of ecosystems by strongly colonising plants such as Phragmites australis is viewed as one of the greatest threats to plant diversity and soil properties. This study compared a range of diversity measures including soil properties and mycorrhizal potential under different degrees of Phragmites density among three populations in coastal wetland, Victoria, Australia. Species richness, evenness and Shanon-Wiener index had significantly higher values in low degree of Phragmites density in all populations. Higher densities had the lowest diversity, with Shannon-Wiener index = 0 and Simpson's index = 1 indicating its mono-specificity. Significant alterations in soil properties associated with different degrees of Phragmites density were noticed. These had interactive effects (population × density) on water content, dehydrogenase activity, microbial biomass (C, N and P) but not on pH, electrical conductivity, phenolics, organic carbon, and spore density. Furthermore, the study elucidated decrease of competitive abilities of native plants, by interfering with formation of mycorrhizal associations and biomass. Overall, our results suggest that significant ecological alterations in vegetation and soil variables (including mycorrhizal potential) were strongly dependent on Phragmites density. Such changes may lead to an important role in process of Phragmites invasion through disruption of functional relationships amongst those variables.