The newly minted legislation ensures that from December 2012, all tobacco will be sold in plain olive-brown packets, and the brand and product names will appear in a standard colour, position, font size and style.
The majority of the packs will feature graphic images of the harmful effects of smoking.
Nicola Roxon, Australia's minister for health and ageing, told the BBC: "We know that packaging remains one of the last powerful marketing tools for tobacco companies to recruit new smokers to their deadly products.
"In the future, cigarette packets will serve only as a stark reminder of the devastating health effects of smoking."
Philip Morris's Asian arm, which owns the Philip Morris subsidiary in Australia, is taking action by serving a notice of arbitration under Australia's bilateral investment treaty with Hong Kong.
It claims it is seeking suspension of the legislation and damages in the "billions of dollars" for the loss of its trademarks and investments in Australia.
The brands it owns in Australia include Marlboro, Alpine, Longbeach, Peter Jackson, Choice and GT.
The company stated: "Plain packaging turns tobacco products into a commodity, robbing Philip Morris Limited of its ability to differentiate its products from competitor brands, and thereby substantially diminishing the value of PMA’s investments in Australia."
This article was first published on marketingmagazine.co.uk
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