Gas producers will need to set aside a portion of their supplies for domestic use under a national plan to ease shortages and exert "maximum downward pressure" on prices.
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Between 15 and 25 per cent of gas will be reserved for Australian manufacturers, households and electricity grid backup, with the exact proportion to be ironed out after consultation.
Energy and Climate Change Minister Chris Bowen said the regime would put "downward pressure" on prices but provided no modelling on those improvements, suggesting the details were still being worked out.
"The fundamentals of the market are such that gas is getting more expensive to extract in Australia, as the Bass Strait is declining," he told reporters in Canberra.
"That fundamental remains, but this is the way that the government can put the maximum downward pressure on prices by engineering the slight oversupply of Australian needs."
Western Australia has long had a gas reservation scheme and Monday's announcement will bring a similar regime to the east coast.
"Most Australians think that Australians should have first rights to the gas that's under Australian soil, Australian waters and that gas should be available to Australians at reasonable prices," Mr Bowen said.
"Australians are right about that."
Australia has been persistently warned of domestic gas shortfalls on the east coast later this decade as supplies dwindle in the Bass Strait fields.
Local manufacturing industries have also been warning high wholesale gas prices threaten business sustainability.
Yet Australia has massive reserves of the fuel and remains a major producer, with most of its supplies exported as liquefied natural gas (LNG) to overseas customers, mainly in Asia.
All contracts with overseas buyers will be honoured under the federal government's regime, with reservation considerations only to apply to arrangements under negotiation from Monday.
The scheme will then come into full effect by 2027.
Mr Bowen said LNG customers in Japan, South Korea and elsewhere had been consulted and welcomed its prospective design.
Industry Minister Tim Ayres said secure and affordable gas supply would support the local manufacturing industry.
"Our government is supporting heavy industry to decarbonise as much as possible, but not every facility can and some use gas as an irreplaceable feedstock," he said.
Australian Workers Union national secretary Paul Farrow celebrated the announcement as a historic victory for manufacturing and workers.
"The best time to introduce an Australian gas reservation scheme was a decade ago," Mr Farrow said.
"The next best time is now."
The coalition, which took a gas reservation scheme to the last election, said the government had been dragged "kicking and screaming" to secure supplies for the domestic market.
"While Labor's recognition that we need a gas reservation is welcome, it is too little, too late," said opposition resources spokesperson Susan McDonald and her colleagues in a joint statement.
The opposition said Labor's plan was light on details and did not address root causes of "gas policy failure", including a lack of investment in new supply.
The main industry body representing gas producers, Australian Energy Producers, supported a prospective reservation policy linked to new supply.
"However, a reservation policy alone will not fix the east coast gas market," chief executive Samantha McCulloch said.
"Bringing new supply online sooner, including in the southern states that are facing shortfalls, is the only sustainable way to put downward pressure on prices and keep the market well supplied for the long-term."
The Australian Conservation Foundation's national climate and energy policy adviser Annika Reynolds said the introduction of a gas reservation scheme did not mean Australia needed to exploit new gas fields.
"It will be important that a reservation scheme redirects gas from existing export projects to the domestic market, not facilitates new climate-heating gas projects," she said.
Australian Associated Press
