All states have agreed to phase out caged eggs by 2036, in response to animal welfare concerns and market trends.
The nation's Agriculture Ministers committed to the new deadline at a meeting in Perth, which will put an end to the use of battery cages.
Federal Agriculture Minister Murray Watt said the implementation would be left to individual states to decide.
"This is good for poultry farmers and for consumers, because we know the market is already shifting," Senator Watt said.
"We're actually at a point in Australia where it's only about 30 per cent of eggs bought in supermarkets are produced using battery cages.
"The market is moving and today the government is catching up."
Woolworths and Coles have agreed to phase out caged eggs from all the brands they sell by 2025, and their own brand of eggs have been caged-free for years.
An independent review of animal welfare standards, which made the 2036 recommendation, triggered the new policy.
Critics claim the move will make the price of eggs rise to $15 a carton.
Senator Watt dismissed the suggestion, pointing to modelling that showed the average egg consumer would pay an extra $1.51 per year.
"I've seen these ridiculous figures thrown around... these are the same people who were out there telling Australians for the last 10 years a lamb roast would cost $100 if we did anything about climate change," Senator Watt said.
The time frame gave the industry plenty of time to adjust to the changes, the Agriculture Minister said.
However, Nationals leader David Littleproud said the industry believed it would have another decade, until 2046, before it had to make the switch and had invested accordingly.
"The investment that you are talking about [to transition] is anywhere from around $2 million or $3 million through to $20 million, depending on the scale of your production," Mr Littleproud said.
"This is where people need to understand that the cost has to be passed on."