New Zealand will resettle 150 refugees from Australia each year for three years.
It comes after years of Australian politicians expressing concerns a resettlement deal with New Zealand would create a "back door" for refugees to enter Australia.
The arrangement will initially be for refugees who are in Nauru or temporarily in Australia under regional processing arrangements and meet New Zealand's refugee program requirements.
They must not be in other third country resettlement pathways, such as through Australia's resettlement arrangement with the United States.
The program will also extend to refugees referred to New Zealand by the United Nations High Commissioner for Refugees.
Home Affairs Minister Karen Andrews reiterated that no one who travelled to Australia via boat would be resettled.
"This arrangement does not apply to anyone who attempts an illegal maritime journey to Australia in the future. Australia remains firm - illegal maritime arrivals will not settle here permanently," she said.
"Anyone who attempts to breach our borders will be turned back or sent to Nauru."
Labor hit back, welcoming the deal but saying it has come much too late.
The party's assistant immigration spokesman Andrew Giles accused the prime minister of being willing to change his policies based on polling numbers.
"All his fearmongering about NZ resettlement was baseless," he wrote on Twitter.
"Nine wasted years and an appalling cost - to the refugees, and to us."
Scott Morrison previously said the federal government had no plans to take up the arrangement when standing next to New Zealand Prime Minister Jacinda Ardern in February 2019 after the medical evacuation laws passed parliament.
"When it comes to the New Zealand arrangement, it's something we touch on every time that we are here. The Australian government has no plans to take up that arrangement whatsoever," he said at the time.
"In terms of Australia's security interests and how we manage our borders, we don't believe it's consistent with that, particularly now after what happened (with the medevac laws)."
Seven months later Mr Morrison said he wouldn't "flip flop" on border policies when asked whether he would re-settle a Tamil family.
"The thing you know about me on border protection is I'm consistent," he said.
Adrian Edwards, UNHCR regional representative for Australia, New Zealand and the Pacific, welcomed the announcement, saying the prolonged uncertainty refugees faced had taken an enormous toll.
But he said the 450 refugees included in the deal would not be enough to cover the more than 110 asylum seekers on Nauru and some 1100 others in Australia.
"We nonetheless hope it will bring about new impetus towards this goal so that compassionate and lasting answers can be found including in Australia for all who have been subject to Australia's offshore processing policies," Mr Edwards said.
Amnesty International Australia refugee advisor Graham Thom expressed disappointment that more than 100 asylum seekers in Papua New Guinea were not included in the deal.
"Solutions will still need to be found for them," Dr Thom said.
"We also can't forget to acknowledge this important step that people have had years of their lives taken from them pointlessly.
"The government could have taken up this offer eight years ago and spared these people ongoing and arbitrary detention and the trauma of that experience."
New Zealand's Immigration Minister Kris Faafoi said the arrangement reflected the country's proud history and strong commitment to resettling refugees.
"This arrangement is another example of how we are fulfilling our humanitarian international commitment," he said.
