Governance standards that come into force on Monday will require tertiary institutions to adopt definitions of racism, including anti-Semitism, Islamophobia and prejudice against Indigenous people.
The plan was foreshadowed in December as part of measures to combat anti-Semitism.
Its introduction coincides with the start of a fresh block of anti-Semitism royal commission hearings, examining hatred directed towards Jewish people on campuses.
The changes were also recommended by the Respect at Uni report - undertaken by the Australian Human Rights Commission - which found more than 90 per cent of Jewish and Palestinian students and staff had experienced discrimination because of their religion or ethnicity.
Under the change, universities will be required to adopt definitions of various forms of racism, but they will not be directed to take on specific terminology such as a controversial International Holocaust Remembrance Alliance definition of anti-Semitism.
Universities will also need to implement transparent complaints processes in addition to allowing third-party participation in their decision-making.
They will also need to provide rules for staff and students on actions to increase safety on campus and online.
Public universities will also need to publish the outcomes of governing body meetings and decisions, among other measures.
The Tertiary Education Quality and Standards Agency will work with the sector to develop guidance on how the standards will operate.
Education Minister Jason Clare said there is no place for anti-Semitism or any type of hate in universities.
"Anyone who doesn't think there have been some challenges in university governance has been living under a rock," he said.
On Sunday, he foreshadowed tougher powers for the sector's regulator to enable it to more easily levy fines against institutions that failed to act.
"The regulator, at the moment, if it wants to fine a university, needs to go to court," he told Sky News.
"I figure that that's not the right approach and so I'll introduce legislation to give the regulator more powers over the coming months."
Experiences outlined in the landmark human rights commission report found students and staff subjected to racist tropes such as petrol-sniffing jokes about Indigenous people.
There was also hostility in classrooms targeting Middle Eastern cultures or religions.
Among the report's 47 recommendations were the creation of national and university-specific anti-racism plans and greater reporting and transparency requirements.
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