"Under the deal, every single Australian will be able to receive the University of Oxford COVID-19 vaccine for free."
Prime Minister Scott Morrison added that it was conditional on trials at Oxford University proving "successful, safe and effective".
The vaccine, called AZD1222, is being developed at Oxford and is licensed to British-Swedish pharmaceutical company AstraZeneca.
Mr Morrison said the Oxford University trial of the vaccine was in a phase-three stage and more work was needed to prove its viability.
But if the vaccine proved successful, Australia plans to manufacture and supply vaccines "straight away under our own steam and make it free for 25 million Australians", Mr Morrison said.
In a radio interview on Wednesday, the Australian leader said he is hopeful the vaccine would be made available early next year.
"If it can be done sooner than that, great," he told Melbourne's 3AW radio station.
It comes after a fresh outbreak of infections in Australia's coronavirus hot zone of Victoria appeared to have eased on Wednesday.
The spike led to restrictions being tightened, including the closure of large parts of the state's economy and a nightly curfew.
In the last 24 hours, Victoria reported 216 new daily cases compared with 222 a day earlier, along with 12 deaths compared to 17 on Tuesday.
Mr Morrison said there is no guarantee that the vaccine would be successful, "which is why we are continuing our discussions with many parties around the world while backing our own researchers at the same time to find a vaccine."
The UK has secured up to 100 million doses of the Oxford vaccine, which has reached phase three trials in Brazil and South Africa.
Preliminary results suggest it is safe and induces an immune reaction.
It is one of six different coronavirus vaccine candidates in development that the UK has access to, across four different types, which represents around 340 million doses.
If the jab is approved, those first in line to receive it are health workers, people with serious diseases, the elderly and ethnic minorities.