The Nazi salute and hate symbols will be outlawed under new counter terrorism laws.
Attorney-General Mark Dreyfus said the government was drawing a line in the sand on glorifying hatred.
Mr Dreyfus said the bill sent a message that "there is no place in Australia for acts and symbols that glorify the horrors of the Holocaust and terrorist acts".
The amendments will be introduced to parliament on Wednesday, making the salute a criminal offence under commonwealth law.
"The amendments will ensure no one will be allowed to glorify or profit from acts and symbols which celebrate the Nazis and their evil ideology," he said.
"There is absolutely no place in Australia for hatred, violence and anti-Semitism."
The coalition said it would support the laws.
Manager of opposition business Paul Fletcher said the laws were needed following a rise in anti-Semitism coinciding with the conflict in the Middle East.
"Australians are aghast the old hatreds have morphed. Anti-Semitic sentiment today hides behind labels like anti-Israel and and anti-Zionist," he said.
"We are in the appalling situation in modern Australia, in which Jewish families are being advised not to advertise their Jewish identity.
"It is our responsibility in this parliament to do all we can to halt the spread of this virulent anti-Semitic hatred and the place to start is with the most potent anti-Semitic symbols."
Co-chief executive of the Executive Council of Australian Jewry Peter Wertheim welcomed the laws.
"A ban on the public display of the symbols of any proscribed terrorist organisation is also timely, as is the ban on trading in goods bearing Nazi and other prohibited symbols," he said.
"Only time will tell how these matters will impact on the effectiveness of the legislation but overall the bill is a major step forward."
Mr Wertheim said there was concern the laws would apply to two specified Nazi symbols, rather than a broad law for all Nazi symbols.
"The knowing public display of a prohibited symbol will not, of itself, be sufficient to constitute an offence. A prosecutor will need to prove at least one of three further elements, which are formulated in a complex manner," he said.
The Islamic State flag will be removed from the bill, after it was initially set to be classed as a hate symbol.
Instead, a new offence will be created to cover symbols used by proscribed terrorist organisations.
There will also be stronger protections for journalists.
