Russia will be blocked from building a new embassy near Parliament House in Canberra over national security concerns.
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The government rushed legislation through both houses of parliament on Thursday, passing it in a little more than an hour with the coalition's backing.
"Today's decision is one taken in the national security interests of Australia," Prime Minister Anthony Albanese told reporters in Canberra.
"The government has received very clear security advice as to the risks presented by a new Russian presence so close to Parliament House.
"We are acting quickly to ensure the lease site does not become a formal diplomatic presence."
The Federal Court in May overruled a decision by the National Capital Authority to evict Russia from a site within 500 metres of Parliament House.
Home Affairs Minister Clare O'Neil said the government had made a decision not to allow the site to be used for a future diplomatic presence by any country.
"The government has received clear national security advice that this would be a threat to our national security," she said.
"That is why the government is acting decisively today to bring this longstanding matter to a close."
Russia's existing embassy in the inner-south suburb of Griffith will not be affected by the decision.
"The Australian government maintains diplomatic relations with the Russian Federation, but we will always, always act in Australia's national interest," Ms O'Neil said.
Asked if the Chinese embassy, which is also located close to Parliament House, posed a security risk, Mr Albanese said the government was acting on specific advice which applied to the location of the site previously leased to Russia.
Ms O'Neil thanked the opposition, Greens and cross bench for their support, and said the legislation passed so quickly because of their co-operation.
"We will act in the face of danger to our democracy and our citizens, and we will do so without any apology to anyone," she told parliament.
Opposition Leader Peter Dutton said there was an "absolutely unified position" on acting in the national interest.
"It sends a very clear message to those that would seek to act against our national interest that they find no friend in this parliament," he said.
"We will do whatever it takes to make sure that we ensure our sovereignty."
Opposition defence spokesman Andrew Hastie said the coalition would stand with the government on the issue of national security.
"There is a trust deficit, there is a real risk to our national interest here and the security advice is that this lease must be terminated," he said.
The National Capital Authority granted the lease for the Yarralumla site in December 2008, and building approvals followed in 2011.
Under the lease conditions Russia had agreed to finish construction within three years, but it remains partially built.
The authority decided to terminate the lease citing that "ongoing unfinished works detract from the overall aesthetic, importance and dignity of the area reserved for diplomatic missions".
The Russian embassy has been contacted for comment.
Australian Associated Press
