The Department of Foreign Affairs and Trade (DFAT) has restored an Australian high commissioner to Fiji, ending a three-year diplomatic hiatus triggered by the expulsion of an Australian envoy in 2009.
Margaret Twomey, the current Australian ambassador to the Russian Federation, will serve as high commissioner from February.
Foreign Minister Bob Carr says the decision comes at a time when Fiji is moving towards democracy.
"I welcome recent moves towards democracy in Fiji, including work towards an electronic electoral roll ahead of the elections scheduled for 2014," he said in a statement.
"There is a long way to go, but recent steps forward deserve the recognition agreed upon in our talks in July.
"Australia will continue to encourage Fiji's return to democracy and the civilianisation of government positions."
Australia's relationship with Fiji has been turbulent since November 2009, when Fiji's leader Commodore Frank Bainimarama expelled the Australian and New Zealand high commissioners from the country.
Mr Bainimarama, who seized power in a 2006 coup, accused Australian diplomats of interfering with Fiji's judiciary and also recalled Fiji's high commissioners from Canberra and Wellington.