The cost of the reburial is to be shared by the two governments, The Australian reported. The French government is to decide on the site of the cemetery.
"Should these remains have been discovered by post-war battlefield clearance teams in 1919, the war dead would have been re-interred with individual headstones; our men are no less deserving of that honor and dignity today," said Warren Snowdon, the Australian minister for defense personnel.
More than 1,700 Australians died at Fromelles on the night of July 19, 1916, the largest one-day loss of life in the history of the Australian military. At least 170 soldiers were missing.
A team from Glasgow University recently discovered a mass grave holding the bodies of at least 400 British and Australian soldiers buried by the Germans in pits in Pheasant Wood on the outskirts of the village.
Snowdon said the bodies appeared to be in good enough condition that separate burial is possible.