The advice was issued at the AI Leadership Summit in Brisbane on Tuesday, where representatives from the National AI Centre also launched revised voluntary guidelines for organisations.
A national AI plan would be released later this year, Science, Technology and Digital Economy Assistant Minister Andrew Charlton told attendees, after months of consultation and debate.
Legal experts and academics welcomed the news, saying businesses and consumers alike needed certainty about the government's AI approach and protection from potential harms.
The Brisbane event was hosted by the Committee for Economic Development of Australia, with speakers from AI heavyweights such as NVIDIA and OpenAI.
Six recommendations were outlined in the newly released guidance, ranging from stress-testing AI systems to ensuring human oversight, and the AI centre's executive director Lee Hickin said the practices were designed to provide leaders with clarity.
Mandatory AI guardrails are yet to be released in Australia despite a public consultation, but Dr Charlton said the government would issue a national plan before the end of the year.
It would focus on the economic opportunity of AI, he said, as well as equitable access to the technology and ways to mitigate risks.
"Artificial intelligence is going to create new and difficult threats that we will have to grapple with," he said.
"Where new challenges arise, we need to make sure that regulators and policymakers are positioned to address those challenges directly."
The government had already banned AI harms that fell outside existing laws, he said, including the use of 'nudify' apps, but future regulations would also be designed to encourage companies to deploy the technology.
"We know we have to lean in to capture the economic opportunity of artificial intelligence for Australia," Dr Charlton said.
"We will be a poorer nation if we do not do this."
Following the economic roundtable in August, Treasurer Jim Chalmers announced AI would become a national priority and the government would undertake a "gap analysis" to determine what laws were needed to address potential harms.
Introducing too many restrictions around the technology could unnecessarily stifle innovation, Clayton Utz partner Simon Newcomb told attendees, when some dangers were already covered by existing laws.
But he said delays and a lack of clarity about Australia's approach to AI were also slowing down investments.
"(What) adds to the anxiety around AI is not knowing how it's going to be regulated," he said.
"We can remove that with some certainty."
CyberCX chief strategy officer Alastair MacGibbon, who previously served as Australia's national cyber security adviser, also called for greater regulation of the technology.
Criminals were using AI to create more effective phishing attacks, he said, and tech firms such as OpenAI and Elon Musk's Grok were re-introducing sexual content to AI services, which Mr MacGibbon said deserved regulatory oversight.
"Thank God the smartest people in the world are now making sex chatbots, that's going to help us all out," he said.
"I think a bit or regulation wouldn't go astray."
