People will be allowed to bring up to four kilograms of kava into Australia for their personal use by the end of this year.
Prime Minister Scott Morrison told Fiji's leader Frank Bainimarama about the new settings for kava during their bilateral meeting in Suva on Friday.
The new limit of four kilograms, which is twice the current amount allowed, will be applicable from the end of the year.
The nation will then trial a program for commercial imports at the end of 2020.
Mr Morrison has described it as a win for Australia and the Pacific family.
The news was well-received by Mr Bainimarama, who joked that all of Fiji had been waiting for it.
The bitter drink, which has mild sedative and euphoric properties, is culturally important in Pacific communities but has had import restrictions in Australia for many years.
Vanuatu Prime Minister Charlot Salwai first raised the idea with Mr Morrison while in Port Vila in January.