In the United States, Silicon Valley has so far resisted efforts by USA lawmakers and law enforcement agencies seeking to gain access to the communications of suspects in criminal investigations.
The law, which has been opposed by tech giants, has caused heated debate over national security and privacy at a time when governments across the globe are grappling with how to access encrypted information to monitor illegal activities.
Australian authorities can also require that those demands be kept secret.
Labor initially proposed 173 amendments to the bill, but agreed to drop them on Thursday so that the law would be passed this year.
The proposed laws were set to be in limbo if they were amended in the Senate, because the coalition shut down the lower house rather than lose a vote about asylum-seeker children.
Even though maximum fines are limited to about US$7 million (NZ$10 million), individuals who fail to comply with the bill may face arrest and prison sentences, according to the draft that is due to take effect. "The government here can coerce the company to actually provide back doors into their systems and into devices and force the company to build systems that can help with investigations".
"We are not going to go home and leave the Australian people on their own over Christmas with inferior laws of national safety", Shorten said.
Under the law, Australian security services can force local and global communications giants such as Google, Facebook or WhatsApp to remove encryption, help hide government snooping and hand over data linked to suspected illegal activities.
"I will fight to get those encryption laws passed", Prime Minister Scott Morrison told reporters in Canberra after Dreyfus spoke.
On the same day it passed in the House of Representatives, the bill was introduced and passed in the Senate as it came to the end of this year's session. Australia is part of the Five Eyes security alliance, along with New Zealand, Canada, the United Kingdom and the U.S. As such, this could cause wider reverberations that are felt internationally. If by doing this there are "systemic weaknesses" that compromise security for everyone else, the companies won't be required to do so.
Canberra-Australia has passed controversial laws created to compel technology companies to grant police and security agencies access to encrypted messages.
"This could have a devastating knock-on effect around the world", said Jake Moore, cyber security expert at ESET UK.
Apple said in a public submission to legislators that providing access to encrypted data would necessitate weakening the encryption and would increase the risk of hacking. Australia and other countries have said that terrorists and criminals exploit this technology to avoid surveillance.