It's not a "cash for guns" scheme, instead people are being urged to hand in any illegal firearms at their local police station, no questions asked.
After the amnesty period, the possession of illegal weapons will be penalised again with up to 14 years in prison and fines.
The amnesty will begin on July 1.
All guns in Australia must be registered but many arrive illegally from overseas through organised syndicates.
In announcing the new amnesty - which will run for three months from July 1 - Justice Minister Michael Keenan said it was an attempt to stop unsafe weapons falling into "the wrong hands".More news: North Korea Demands Women 'Abducted' by South Korea Are Sent Back
"Clearly the fact (is) we've got a deteriorating national security environment, we've got an environment where there has been five terrorists attacks on our soil and, sadly, in the vast majority of those cases it has been an illegal firearm that's been used", Keenan said.
Australian police talk outside a bar as they investigate whether live firearms were used in the filming of a music video during which an actor was fatally wounded in the chest in Brisbane January 23, 2017.
The Australian Bureau of Statistics shows the nation has since imported nearly 1.2 million legal guns.
"We don't want those guns to be able to fall into the wrong hands", he said.
Government said the amnesty - where people can hand in their guns, no questions asked - was being held against a backdrop of an increased threat of terrorism and ongoing gun violence.More news: Republican congressman Steve Scalise still critically ill after baseball field shooting
The report said the market for illegal guns is partly driven by Middle Eastern crime gangs, outlaw motorcycle clubs and other groups that traffic illegal commodities such as drugs.
He said: "While there have been state-based amnesties since then, it is again time that we give every Australian the chance to dispose of firearms without fear of being prosecuted".
Labor is backing the amnesty.
"We do encourage people to bring them in".
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