The plan would force around 500 of Australia's most polluting companies to pay $24 for each ton of carbon they emit, beginning next July. It would evolve into a cap-and-trade emissions plan in 2015.
Australian Prime Minister Julia Gillard, who pledged during last year's federal election not to introduce a carbon tax, called the introduction of the bills Tuesday a "historic step."
"I am determined to make change work for us to create a cleaner environment and better opportunities for generations to come," she said.
She said the carbon price would support $102 billion worth of investments in renewable energy over the next 40 years.
"The investments of the future are clean-energy investments," Gillard said.
"Employment is projected to grow strongly with a carbon price," she said, adding that 1.6 million jobs would be created in the next eight years.
Gillard's plan has been fiercely opposed by several heavily polluting industries and opposition leader Tony Abbott, who labeled it as "politically and economically and environmentally disastrous" and the ''longest suicide note in Australian history'' as the parliamentary debate on the scheme began Tuesday.
Abbott claims the plan would result in a massive transfer of wealth from Australia to carbon traders overseas.
About 40 observers seated in the public gallery were escorted out by parliamentary security after chanting "No carbon tax" during question time, the Herald Sun newspaper reports.
The legislation will undergo a month of consideration before a final vote, which was scheduled for Oct. 12.
As Australia is one of the world's worst per capita polluters, the carbon tax is pivotal to the government's plan to cut carbon emissions by 5 percent of 2000 levels by 2020 to help slow global warming.
One of the architects of China's plan to reduce its carbon emissions said Chinese policy makers are closely following the political debate on Australia's carbon plan.
"What happens in Australia is quite interesting," Jiang Kejun of the Energy Research Institute in China was reported as saying by the Australian Broadcasting Corp.
"I strongly hope that Australia can go ahead fast and take the lead in the world. I think many other countries can really learn from this process."
China, the world's biggest carbon emitter, has chosen six pilot cities known for heavy industry to test an emissions trading scheme beginning as early as 2013.
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