Onshore stockpiles of technical grade urea will be established by the federal government to improve long-term supplies of the popular diesel exhaust fluid, AdBlue.
The 7500 tonne government controlled stockpile of TGU, which is the main component required to produce AdBlue, will be located in one or more of Australia's capital cities.
AdBlue reduces the concentration of nitrogen oxides in exhaust emissions from most line haul trucks manufactured after 2010, certain models of agricultural machinery and some diesel four-wheel drives.
The move comes in response to consultation with industry after it emerged last December that stocks were running low across the nation.
This sparked concerns the transport sector could come to a halt at one of its busiest times of the year.
The government has also announced it will collect voluntary data from industry to provide market awareness of domestic stocks of TGU and DEF.
A grants program to support Australian manufacturing projects looking to produce TGU domestically will also be established.
The government will invest $49.5 million over four years to set up the three measures.
Climate Change and Energy Minister Chris Bowen said the Australian government was taking action to ensure supply and strengthen the market.
"While the market is currently well-supplied, we need to put in place measures to deliver certainty and provide back-up in case of disruption," he said.
"We are also monitoring and engaging with industry to ensure the market is functioning properly and the supply chains are delivering."
A spokesperson for Mr Bowen said the department was working on the procurement arrangements and aimed to move as quickly as practicable to implement the stockpile.
They said the stockpile would be located in one or more of the major metropolitan areas such as Melbourne, Sydney, Brisbane and Perth.
"These locations are in proximity to key demand centres for DEF and where existing blending and distribution infrastructure is located," they said.
"Locations will be determined based on value for money and the best solution offered by the market in the procurement process.
"Indications are that there is currently stock available to purchase and industry are ready to engage in the process with the government."
The 7500t TGU stockpile equates to an additional five weeks of AdBlue supply once it has been processed.
In the event of a shortage, the government will determine the timing and volume of a release.
"This will be managed in such a way as to avoid any distortion to the market and make sure that import parity pricing is preserved," the spokesperson said.
"The department will consult closely with industry on these arrangements via the existing Supplier Working Group - a forum chaired by the department which includes all of Australia's major DEF players."
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The Australian Trucking Association is one of the organisations that has been liaising with the government over the past 10 months about how best to avoid future crises.
Its chairman David Smith said it was pleasing to see the government had listened and acted on advice from stakeholders.
"We now have an onshore stockpile, we're also looking at onshore manufacturing capability and voluntary data collection on the state of AdBlue in Australia and that is fantastic news," he said.
"It demonstrates that both Minister Bowen and the department are serious about resolving this issue and have put serious money up to establish a long-term plan."
National Farmers' Federation vice-president David Jochinke said moves to secure AdBlue supplies past the end of this year would come as a relief to farmers.
He said the AdBlue crunch should prompt broader thinking by governments about long term supply chain vulnerabilities, including the availability of fertilisers and farm chemicals.
"Last year we came uncomfortably close to a full-scale crisis, when the government stepped in to extend production," Mr Jochinke said.
"As that stopgap comes to an end this year, we've been calling for longer term measures to secure Australia's supply.
"The new government stockpile, coupled with grant support for domestic producers, will position Australia well for future volatility."
