Australia will reopen its international border from November, allowing travel initially for vaccinated citizens and their relatives.
Since March 2020, only some Australians and others have entered the country due to strict rules. Outbound travel is also banned without an exemption.
States with vaccination rates above 80% will be given the new travel freedoms.
"It's time to give Australians their lives back," Prime Minister Scott Morrison said on Friday.
Travel will not immediately be open to foreigners, but the government said it was working "towards welcoming tourists back to our shores".
At present, people can leave Australia only for exceptional reasons such as essential work or visiting a dying relative.
Australia's mandatory 14-day hotel quarantine - which costs each traveller A$3,000 ($1,600; $2,100) - will also be phased out.
Demand for flights is expected to be high and airlines have already warned of delays in resuming services.
Sydney, Melbourne and Canberra are currently in lockdown due to outbreaks of the virus.
That has helped prompt a surge in the vaccine uptake in recent months.