The rules, which would take effect from 1 July, 2012, would ban logos, promotional text or colourful images on cigarette packages. Graphic health warnings would be prominently displayed instead, with the brand name relegated to a tiny, generic font at the bottom.
"Cigarette companies will hate it," said prime minister Kevin Rudd.
Tobacco companies criticised the packaging crackdown, and vowed to fight it in court
"Introducing plain packaging just takes away the ability of a consumer to identify our brand from another brand and that's of value to us," said an Imperial Tobacco Australia spokeswoman, adding the company plans to take legal action.
Tim Wilson, of Australia's Institute of Public Affairs, said taxpayers could end up paying about AU$3 billion (1.8bn) a year in compensation to tobacco companies for the loss of intellectual property rights such as trademarks.