The Federal Government has introduced a bill to Parliament will allow every Australian to be issued with electronic identification.
If passed, the bill will see unique 16 digit numbers created for individuals and health care providers by the middle of this year.
The Individual Healthcare Identifier (IHI) is a step towards an e-health system that will eventually give citizens comprehensive electronic health records that can be used by multiple healthcare providers.
Last year, the National Health and Hospital Reforms Commission (NHHRC) also recommended that the e-health system allow individuals to determine which practitioners their information can be shared with, and how their records will be stored, backed-up and retrieved.
"The government is currently undertaking the most important overhaul of our health system since the introduction of Medicare 25 years ago," said Nicola Roxon, Minister for Health and Ageing.
"This bill establishes the healthcare identifiers, without which there cannot be an integrated, consistent, e-health system in Australia."
Roxon said that safeguards would be put in place so that minimal demographic information would be collected and no clinical information would be held by the service operator.
Only authorised healthcare providers would be able to access the records of their existing patients, and independent regulators would manage a "robust complaints handling framework", she said.
According to the bill, minor amendments would be made to the Privacy Act to ensure that the Federal Privacy Commissioner can act against any individual or company that misuses an individual's healthcare identifier.