Canberra has said that it wants one million fewer Australians to smoke by 2020.

Rudd said that about 15,000 Australians die of smoking-related diseases every year, and that tobacco use costs the country $31.5bn a year in healthcare and lost productivity.

Price hike

The government also announced a 25 per cent hike in the tax on cigarettes from midnight on Thursday. 

"It's a lazy policy response being pushed by some health advocates"

Mick Daly, chairman of the IGA supermarket chain

Tobacco companies immediately condemned the packaging rules and vowed to challenge them 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,'' Cathie Keogh, a spokeswoman for the Imperial Tobacco company, told local radio.

"It really affects the value of our business as a commercial enterprise and we will fight to support protecting our international property rights."

Rob Moodie, chair of the government's National Preventative Health Taskforce, which recommended the legislation, said that stripping packages of their logos would effectively stamp out tobacco companies' marketing campaigns.

"The thing that tobacco companies fear second after price increases is plain packaging because it takes away their last real avenue for branding their cigarettes,'' he said.

"It also takes away their in-store presence."

'Direct attack'

Retailers said the tax hike would hurt their businesses and bolster the cigarette black market.

"It's a lazy policy response being pushed by some health advocates," Mick Daly, the national chairman of Australian supermarket chain IGA, said in a statement.

"That amounts to a direct attack on approximately 16 per cent of Australians who have made legal and legitimate lifestyle choices.''

Australia has banned tobacco advertisements from print, television and radio for many years, but the new proposal extends restrictions to internet advertising.