Independent MP Helen Haines says it's disturbing major parties routinely abuse taxpayer-funded advertising and hijack public information campaigns.
The Grattan Institute found nearly one-quarter of the federal government's annual $200 million advertising outlay was going towards politicised messages.
Over the past 13 years, the amount spent federally on advertising that lauded government achievements was worth $630 million.
The think tank says the issue exists on both sides of politics and at state and federal levels.
Ms Haines said taxpayers expected public money would be used in their best interests.
She said the millions of dollars being spent for political purposes fuelled cynicism from the public.
"Public trust and confidence in government is diminished," she told the ABC.
"It's time for this to stop."
Independent MP Dai Le said the amount governments had spent was eye-watering, with those outside the tent being forced to spend their own money campaigning.
"The major parties having those funds, it's taxpayers money to promote their own machinery," she told Nine.
"It needs to be really reassessed."
Of the 10 most politicised federal advertising campaigns during the past 13 years, half came from Labor and the other half from coalition governments.
Grattan Institute chief executive Danielle Wood, the report's lead author, said the research showed Australians couldn't rely on the goodwill of government ministers to stop public money being spent for political purposes.
"Weaponising taxpayer-funded advertising for political advantage wastes public money, undermines trust in politicians and democracy, and creates an uneven playing field in elections," she said.
The report recommends tougher rules at state and federal levels to stop governments abusing the use of advertising.
Campaigns should only be allowed when they encouraged specific actions, while those that only promoted policies or programs without a call to action should be banned.
Ms Haines backed the institute's calls for an independent panel to assess government advertising and the push for a new parliamentary committee.
The prime minister has moved to ban political fundraisers inside Parliament House ahead of budget week.
The government has also pledged to take a stronger stance on responsibility, with Deputy Prime Minister Richard Marles telling reporters the buck stops with ministers.
"We accept responsibility. We accept the responsibility of government, and we do so going forward," he said.
"No ifs, no buts about all of that".
"It's not ultimately for departments to stand here and accept responsibility for government performance. It is ministers."
