In a bizarre attack on the Australian national team, Blatter said he came to the conclusion after watching Ange Postecoglou's team play on television during the recent Confederations Cup.
"I saw them on TV yesterday. They looked like a rugby team," Blatter said in remarks published by Swedish newspaper Expressen in July.
"Some of their players were overweight. They need to work out more. They need to run more."
The Socceroos earned rave reviews for their performance against Chile in their final Confederations Cup match, which ended in a 1-1 draw.
They were also applauded by Germany's World Cup winning coach Joachim Loew after losing their opener 3-2, while they also fought out a 1-1 draw with Cameroon.
Blatter was slapped with a six-year ban from all football activities last year for approving a dubious PS1.35m payment to UEFA boss Michel Platini, who was also banned.
Blatter made the comments while trying to explain how football was a game "anyone can play", including women of all shapes and sizes.
"In men's sport it's different, because the athletes are so big. Like in the Australian national team," he said.
The Socceroos return to action on August 31 in their penultimate World Cup qualifier against Japan in Saitama.