Boris Johnson said the agreement, which removes all tariffs on UK goods and represents the first major trade deal negotiated from scratch since Britain left the EU, showed “global Britain at its best”.
But the SNP have questioned the lack of protections for farmers and crofters north of the border, claiming Scotland had been “kept in the dark” and not consulted.
The deal means British products like Scotch whisky, cars and biscuits will be cheaper to sell into Australia, with the trade relationship set to improve on the £13.9 billion it was worth last year.
The Prime Minister said: “Today marks a new dawn in the UK’s relationship with Australia, underpinned by our shared history and common values.
“Our new free-trade agreement opens fantastic opportunities for British businesses and consumers, as well as young people wanting the chance to work and live on the other side of the world.
“This is global Britain at its best – looking outwards and striking deals that deepen our alliances and help ensure every part of the country builds back better from the pandemic.”
Scotland exported £126 million of beverages to Australia in 2020, and the deal now removes tariffs of up to 5 per cent on Scotch whisky.
Mr Johnson agreed the main elements of the deal with the Australian Prime Minister Scott Morrison at a meeting in Downing Street on Monday night.
The UK Government claims farmers will be protected by a cap on tariff-free imports for 15 years.
Under the agreement, Brits under the age of 35 will also be able to travel and work in Australia more freely.
Secretary of State for international trade Liz Truss said: “This deal delivers for Britain and shows what we can achieve as a sovereign trading nation.
“It is a fundamentally liberalising agreement that removes tariffs on all British goods, opens new opportunities for our services providers and tech firms, and makes it easier for our people to travel and work together.
“The agreement paves the way for us to join the Trans-Pacific Partnership, a £9 trillion free trade area home to some of the biggest consumer markets of the present and future.
“Membership will create unheralded opportunities for our farmers, makers, innovators and investors to do business in the future of engine room of the global economy.”
NFU Scotland had previously contacted Scottish politicians to seek their support in ensuring that any trade deal with Australia followed the correct process.
Union president Martin Kennedy said he was concerned over the Australia free trade agreement negotiations, stating that Scotland’s beef, dairy, sheep and grain sectors were particularly exposed.
Liberal Democrat MP for Caithness, Sutherland and Easter Ross, Jamie Stone, claimed the deal failed farmers.
He said: “Not putting this deal before Parliament means that MPs like me who represent crofters and farmers have been stopped from making meaningful changes that would stop prices and animal welfare standards from being undercut.
“Quite simply, the agreement fails our farmers, and it fails consumers who care about animal welfare standards.
"The deal will benefit the whisky industry - and for that I am glad.
"I just think that not putting it to Parliament has meant that other industries, like the farming industry, have been cut out with no means of recourse.
"It's yet another of example of a Prime Minister who doesn't care for Parliamentary sovereignty and the farmers I represent."
SNP environment, food and rural affairs spokesperson Deidre Brock MP questioned whether any protections were in place for farmers.
She said: "The interests of Scottish farmers and crofters have been completely sidelined by the Tory government throughout these negotiations – and there remain serious concerns over the negative impact this deal will have on Scotland's agricultural industry.
"Scotland has been kept in the dark and not consulted. There is no evidence of any meaningful protections to prevent Scottish farmers being undercut on the price and standards of beef, lamb and other produce.
"The UK Government must publish the full details of the deal without delay, allow proper parliamentary scrutiny, and ensure meaningful consultation with the Scottish Government, and Scotland's food and drink sector, to prevent disastrous consequences.”