The laws would require social media companies to collect the details of all users, and allow courts to force companies to hand over the identities of users to aid defamation cases.
Social media companies would also be made legally liable for the content they publish from users, removing liability from individuals and companies that manage pages.
The legislation was to be released in draft form this week, and is expected to be introduced to Australia's parliament early next year.
Prime Minister Scott Morrison said he wanted to close the gap between real life and discourse online.
"The rules that exist in the real world must exist in the digital and online world," he said.
Under the proposal, social media companies will be required to create a complaints process for people who feel they have been defamed online.
The complaints process will allow people to ask that material be taken down by a user if they feel it is defamatory.
If the user is unwilling to take down the content, or the complainant wants to take further action, the company asks a user for their consent to release their personal details.
If the user does not consent to their details being released, a court order can be made requiring the company to release them - allowing the complainant to pursue defamation action.
Morrison said the government would be happy to intervene in court and take on social media companies trying to avoid releasing personal details.
"So if the digital companies or others think they're only just going to have to be dealing with perhaps someone of little means seeking to pursue this, then we will look for those cases.
"We will back them in the courts and we will take them on."
Morrison said the establishment of a public defender's office tasked with taking on such cases was under consideration.