Britain's Prince Philip is the last person to receive a knighthood from Australia.
The 94-year-old royal was awarded the title in January by Australia's then-Prime Minister Tony Abbott under its honours system, but the country's new leader Malcolm Turnbull has now decided to scrap the award system.
Mr Turnbull believes knighthoods and dames are "not appropriate" in modern Australia and Queen Elizabeth had accepted the cabinet's recommendation to axe them.
The Australian cabinet issued a statement stating: "Awards in the Order of Australia are an important way of honouring the achievements and service of many Australians, including those unsung heroes who might not otherwise be recognised outside their local communities.
"The Cabinet recently considered the Order of Australia, in this its 40th anniversary year, and agreed that Knights and Dames are not appropriate in our modern honours system."
Mr Abbott reintroduced the titles last March almost 30 years after they were initially scrapped by Labour PM Bob Hawke.
The ousted leader's decision to bring back the award was heavily criticised at the time.
And he was slapped with even more backlash earlier this year when he nominated Philip for the knighthood, which some people thought was a "totally crazy" move.