In a rare speech in English - Prime Minister Shinzo Abe referred to the wartime tensions of the past.
Mr Abe said since 1945, Japan had taken the path of peace and would never repeat the horrors of the second world war.
Shinzo Abe declared it a new era for Japan's relationship with Australia.
Australia's Prime Minister Tony Abbott described it as an extraordinary address.
Correspondent: Louise Yaxley
Speakers: Shinzo Abe, prime minister of Japan; Tony Abbott, prime minister of Japan
LOUISE YAXLEY: Prime minister Abe delved into his nation's history and his own in a speech to a special sitting of Federal Parliament. He chose to take a frank approach to the past as a sign of good faith for the future.
SHINZO ABE: We will never let the horrors of the past century's history repeat themselves. This vow that Japan made after the war is still fully alive today.
It will never change. I stand here in the Australian Legislative Chamber to state this vow to you solemnly and proudly.
LOUISE YAXLEY: But Chinese and Korean protesters outside Parliament don't trust Japan and have not forgiven it for the war crimes in the past.
(Sound of protestors yelling "Abe! Abe! No, no, no!")
PROTEST LEADER: Abe, apologise for Chinese, Korean and Australian!
LOUISE YAXLEY: They waved signs saying "no Japan rearmament" and "no neo-militarism in Japan."
Those protesters are worried that Japan under Shinzo Abe is moving away from the constraints imposed by its pacifist constitution.
Mr Abe outlined his new approach in his speech to Federal Parliament.
SHINZO ABE: Japan is now working to change its legal basis for security so that we can act jointly with other countries in as many ways as possible. We want to make Japan a country that will work to build an international order that upholds the rule of law.
Our desire is to make Japan a country that is all the more willing to contribute to peace in the region and beyond.
LOUISE YAXLEY: Mr Abe says other nations should not be afraid.
SHINZO ABE: In everything we say and do we must follow the law and never fall back onto force or coercion. When there are disputes we must always use peaceful means to find solutions.
LOUISE YAXLEY: Australia and Japan have signed a deal to deepen their own defence co-operation. The Prime Minister, Tony Abbott, told Parliament it is similar to agreements Japan's already struck with the United States and the UK.
TONY ABBOTT: For decades now Japan has been an exemplary international citizen. So Australia welcomes Japan's recent decision to be a more capable strategic partner in our region.
I stress: ours is not a partnership against anyone. It's a partnership for peace, for prosperity and for the rule of law. Our objective is engagement.
And we both welcome the greater trust and openness in our region that's exemplified by China's participation in this year's RIMPAC naval exercises.
We do not, as I've put it, win new friends by losing old friends and what I want to do, what I'm confident prime minister Abe wants to do is to deepen all of our relationships. Now, I also think that our region will go forward together in harmony, in peace, or ultimately it won't go forward at all.
LOUISE YAXLEY: But the main purpose of prime minister Abe's visit is to sign a free trade deal. It builds on the commerce treaty Robert Menzies signed with Shinzo Abe's grandfather, prime minister Kishi, 57 years ago.
SHINZO ABE: That propelled us on the road to prosperity which we still enjoy today.
LOUISE YAXLEY: The new trade deal eliminates or reduces tariffs, including on beef, wine, shellfish, fruit, vegetables, raw sugar and nuts.
Ninety-nine-point-seven per cent of Australian resource, energy and manufacturing exports would enter Japan duty-free once it comes into force. And there would be better access for Australian services to Japan.
Mr Abe told Parliament he wants it to be the start a new dawn in the relationship between the two nations.
SHINZO ABE: Japan and Australia have deepened our economic ties. We will now join up in a scrum, just like in rugby, to nurture our regional and world order and to safeguard peace.