Legislation is expected to be passed which would see Australia become the first country in the world to sell cigarettes in plain, drab green packets, without logos or any form of branding.
Australia's upper house, the Senate, is due to approve the historic laws that would prohibit tobacco companies from displaying their distinctive colours and brand designs on cigarette packs in an attempt to make smoking less attractive to the young.
It would make Australia the world's toughest country when it comes to the promotion and sale of cigarettes.
The new packets would go on the shelves from December next year.
Tobacco firms argue that the move illegally diminishes the value of their trademarks and have threatened a court battle for billions of dollars in compensation.
Health Minister Nicola Roxon said her government was "determined to take away the last method of advertising" cigarettes in Australia.
"We're not going to be bullied into not taking this action just because tobacco companies say they might fight us in the courts," she said.
"We're ready for that if they do take legal action."
Australia is a relatively small tobacco market where the falling rate of smokers is 17%, compared with around 20% of American adults.
But tobacco companies fear a precedent that could be adopted by more lucrative and growing markets.
The packets would be 75% covered with warnings and often gruesome images of the consequences of smoking, such as mouth cancer and gangrenous toes.
Graphic health warnings currently cover only 30% of packs.
Tobacco company Philip Morris says plain packaging severely diminishes the value of the company's trademark.
British American Tobacco Australia Ltd, the Australian market leader, warned that the government would have to spend millions in legal fees in numerous legal challenges to the law and potentially billions in compensation.