Environment Minister Ian Campbell said on Wednesday that details of the deal and the countries involved would be announced soon.
The negotiations have also involved China, India and South Korea, a report in The Australian newspaper said.
The new alliance will bring together nations that account for more than 40% of the world's greenhouse gas emissions, the newspaper said.
It said the group would be known as the Asia-Pacific Partnership for Clean Development and Climate.
A government source told AFP that the general thrust of the report was correct, but that the line-up of countries involved had not been finalised.
The Kyoto pact, which went into force in February this year, imposes legally binding requirements on 35 industrialised states to cut emissions of greenhouse gases by an average of 5% below 1990 levels by 2008-12.
One of the US arguments against the present Kyoto format is that it does not require big developing countries such as China and India to make targeted emissions cuts.
But developing countries say historical responsibility for global warming lies with nations that industrialised first, and primarily with the US, which by itself accounts for a quarter of all global greenhouse-gas pollution.
The Australian said the initiative was led by the United States and had been discussed when Prime Minister John Howard met President George W. Bush at the White House during a visit to Washington last week.
John Howard (L) and George Bush
have discussed the pact in person
Campbell said Australia, which has vital interests in coal and gas exports to China and South Korea, had been working on the new alliance for the past 12 months.
"It's quite clear the Kyoto protocol won't get the world to where it wants to go... We have got to find something that works better - Australia is working on that with partners around the world," Campbell said on Wednesday.
"We need to expand the energy the world consumes and reduce the emissions. That's going to need new technologies, it's going to need the development of new technologies and the deployment of them within developing countries," Campbell said.
"The development of that technology and the deployment of it as rapidly as possible, that is going to need something that is far more comprehensive, far more likely to produce results that the Kyoto Protocol could even dream of."
Campbell said greenhouse gases under Kyoto would actually rise by 40%, when scientists say emissions need to be cut by 50% to have any chance of limiting the impact of global warming.
But the opposition Labour Party called on the government to immediately ratify the Kyoto pact. Leader Kim Beazley dismissed the new agreement, saying: "It is nothing. It's spin."
The leader of the opposition Australian Greens party, Bob Brown, said the agreement was "a coal pact" involving four of the world's biggest coal producers.
It was designed to "defend the coal industry in an age where it's the biggest industry contributing deliberately to the global warming threat to Australia and the planet," he told reporters.
"Environment Minister Ian Campbell concedes a comprehensive agreement involving all major emitters is needed. Skulking around making secretive, selective deals will not accomplish this. Signing up to the Kyoto Protocol will"
Greenpeace energy campaigner
"This is the blinkered view, the ostrich approach by prime minister Howard to arguably the biggest common threat to the planet in 2005, which is global warming.
"It won't fool the Australian people and it won't fool world opinion," Brown said.
Environmental group Greenpeace, which blockaded an Australian coal port on Wednesday to protest Australia's reliance on fossil fuels, agreed the Kyoto Protocol was the best option.
"Environment Minister Ian Campbell concedes a comprehensive agreement involving all major emitters is needed," Greenpeace energy campaigner Catherine Fitzpatrick said in a statement.
"Skulking around making secretive, selective deals will not accomplish this. Signing up to the Kyoto Protocol will."
A panel of scientists that advises the United Nations has said world temperatures are likely to rise between 1.4C and 5.8C by 2100, triggering more frequent floods, droughts, melting of icecaps and glaciers and driving thousands of species to extinction.
Rising global temperatures are
melting icecaps and glaciers
On Tuesday, Australia released a climate change report that said the continent could be up to 2C warmer by 2030 and face more bushfires, heat waves and storms despite efforts to reduce greenhouse gases.
Scientists say the planet's average surface temperature has increased by about 0.6C over the past century and that the warmest decade of the past 100 years was the 1990s.
Researchers say further warming is inevitable because of the huge amount of extra carbon dioxide pumped into the atmosphere by man's activities, but the degree of future warming hinges on how nations control their greenhouse gas emissions now.
The US is the world's biggest emitter of greenhouse gases followed by China.
Earlier this month in Scotland, the Group of Eight industrialised countries bowed to US pressure by approving a declaration on climate change that avoided taking any concrete steps to fight global warming, such as setting targets or timetables for reducing greenhouse gas emissions.
For more information on the Kyoto Protocol, please visit the United Nations Framework Convention on Climate Change website.