A bill waiting for approval from the upper house Senate says adults caught using the Internet to procure children younger than 16 for sex, could face 15 years in jail.
The new law would also impose prison terms of 10 years for accessing or transmitting child pornography on the Net.
"The new offences will strike at the heart of the repulsive trade in material depicting the sexual abuse of children and
will also enable consistent prosecution of offenders Australia-wide under federal law," Communications Minister Daryl Williams and Justice Minister Chris Ellison said in a joint statement.
The bill has been introduced in the Senate, which must approve it before it becomes law. Around 85 percent of child pornography seized by police in Australia is distributed over the Internet.
Australian police are forming a global taskforce with crime squads from Britain, the United States and Canada to patrol Internet chatrooms in a crackdown on paedophile rings as the problem grows.
Last year, Microsoft's MSN Web portal shut down chatrooms in nearly every country where it operated, saying they had become a haven for paedophiles and spam-peddlers.
Child safety groups welcomed the move, but others feared criminals would burrow further underground for prey.