Prime Minister Kevin Rudd said $200 million ($173 million US) would be spent over four years on increased airport policing and security technology after the attempted bombing of a jet flying from Amsterdam to Detroit on December 25.
"The Christmas Day attempt showed that no nation can afford to be complacent when it comes to security," he told reporters in Canberra. "The government's highest priority is the safety and security of Australians."
Rudd said the government would spend $28.5 million dollars helping the industry fund a range of new screening technologies, including body scanners, multi-view x-ray machines, and bottle scanners that detect liquid explosives.
"Body scanners will be introduced progressively as an additional screening measure at screening points servicing international departing passengers by early 2011," Rudd said.
Several European countries, including The Netherlands and Britain, began installing body scanners after the December bombing scare while the United States accelerated their installation in airports in the wake of the incident.
Nigerian Umar Farouk Abdulmutallab has been accused of trying to blow up a passenger jet using powerful explosives hidden in his underwear.
Rudd acknowledged that the new measures could create concerns about privacy and the amount of time passengers spent going through security procedures.
"We've got to make a judgment here. An incident has occurred in the United States. You learn practical things from it, you get the best advice, you respond," he said.
The plan, which follows a government review of aviation and the National Security Adviser's assessment of air security following the attempted attack, also includes toughened screening measures at regional hubs.
Rudd said authorities would also strengthen international cooperation to improve security on flights, as well as boosting security on cargo planes.
Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.