Australia will aim for net zero carbon emissions by 2050 but will not pass legislation about the goal.
Prime Minister Scott Morrison said the government would instead rely on consumers and companies to push towards emission reductions.
Australia had so far refused to join countries such as the UK and US in pledging to achieve net-zero emissions by 2050 ahead of the COP26 climate conference in Glasgow next week.
Australia is one of the world's largest emitters of greenhouse gases on a per capita basis and a major exporter of fossil fuel such as coal.
Mr Morrison said the country will work to achieve its target through technological development, with the government investing A$20bn (£11bn).
He said the investment will reduce costs of technologies such as clean hydrogen.
"Australians want action on climate change. They're taking action on climate change, but they also want to protect their jobs and their livelihoods. They also want to keep the costs of living down," Mr Morrison told reporters in Canberra.
"I also want to protect the Australian way of life, especially in rural and regional areas. The Australian way of life is unique."
However, Mr Morrison said Australia would not strengthen its 2030 target of reducing emissions by 26-28% from 2005 levels, even though the country will surpass the target by reducing emissions between 30-35% by 2030.
Mr Morrison said his net zero plan would not shut down Australia's coal or gas production or increase costs to households and businesses.
"It is not a revolution but a careful evolution to take advantage of changes in our markets," Mr Morrison said.
The prime minister has struggled to gain support for the net zero target from his coalition government's junior partner, the National Party, whose supporters are reliant on agriculture and mining.
But on Sunday, the party said it would support a net zero target.
Mr Morrison faces an election in May 2022, with a poll on Monday suggesting he is on course to lose to the centre-left Labor party.