The agreement between Hamas and Israel will come into effect on Sunday and outlines the gradual withdrawal of Israeli forces from the besieged strip.
Israeli hostages held by the designated terrorist group will be exchanged for Palestinian prisoners.
"This agreement is a constructive step towards peace and stability in the region - today must mark the beginning of a new chapter for the Israeli and Palestinian people," Mr Albanese told reporters in Canberra on Thursday.
Anthony Albanese says the ceasefire is a constructive step towards Mideast peace and stability. (Dominic Giannini/AAP PHOTOS)
"We hope it will allow the Palestinian people the opportunity to rebuild, reform their governance which is most necessary to pursue self-determination.
"We will continue to act in partnership with the international community to support the urgent humanitarian needs of the people of Gaza."
There's hope a ceasefire in Gaza will quell community tensions as Australia welcomes the announcement while calling for further humanitarian aid.
"I certainly hope and have consistently called for the lowering of temperature here," Mr Albanese said.
"Australians, I believe, wanted to see the hostages released, they want to see an end to conflict, they also don't want conflict brought here."
Joint statement on the ceasefire and hostage deal in the Middle East. — Anthony Albanese (@AlboMP) pic.twitter.com/OmxDxJX35LJanuary 15, 2025
The sentiment was echoed by cabinet minister Murray Watt, who said he hoped the peace agreement would extend to hostilities in Australia amid a rising spate of anti-Semitic attacks and a spike in Islamophobia.
"I hope all Australians can see the joy on display in Israel and the Palestinian occupied territories and take that as a sign that people do want to move on in peace," he told ABC TV.
Australia Palestine Advocacy Network president Nasser Mashni said there was a sense of relief but Palestinians didn't trust Israel's word.
"Israel needs to be held accountable by the international community ... international law must apply," he said.
"Gaza is an apocalypse zone, the UN estimates it will take 15 years to clear the rubble.
"The fact that the world has allowed it to go on for this long is shameful and history will judge those leaders very poorly."
Executive Council of Australian Jewry co-chief executive Alex Ryvchin doesn't believe the ceasefire will have a great effect on community tensions and anti-Semitism.
Fire damage at the Adass Israel Synagogue in Melbourne following an arson attack. (Yumi Rosenbaum/AAP PHOTOS)
"I think those who are determined to burn synagogues and menace and threaten and harass the Jewish community here in Australia, I don't think they will be placated by what's transpired diplomatically," he said.
"We as a society, law enforcement, judiciary, in government need to keep this fight against anti-Semitism going, it's not going to evaporate on its own."
Liberal senator Simon Birmingham also welcomed the ceasefire, saying if honoured, it would bring an end to the current bloodshed that had happened since the horrors of October 7, 2023.
"This ceasefire comes from a position of Israeli strength and changed regional dynamic, which wouldn't have been possible had Israel simply yielded to initial one-sided ceasefire calls that were supported by Labor," he said.
He referred to US President Joe Biden's remarks that the ceasefire was the result of extreme pressure on Hamas and the weakening of its backer, Iran.
United Nations secretary general Antonio Guterres welcomed the ceasefire, adding it needed to ensure unimpeded aid into Gaza to address the humanitarian crisis.
"The humanitarian situation is at catastrophic levels," he said.
At least 46,000 people have been killed since the attack on Gaza in October 2023. (AP PHOTO)
Children in Gaza needed to be able to safely access assistance with 18,000 killed since the start of the war and thousands others suffering life-altering injuries, Save The Children said.
"The race is on to save children facing hunger and disease as the shadow of famine looms," Save The Children International CEO Inger Ashing said.
The ceasefire provided "a glimmer of relief to Palestinian victims of Israel's genocide" but was overdue and wouldn't repair people's shattered lives, Amnesty International said.
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