The PM says the boycott should come as "no surprise".
Australian officials will not attend the Beijing Winter Olympics, in a formal boycott of the Games over China's human rights abuses against Uyghur minorities in the country.
The US this week confirmed it would not send any diplomats or officials to the Games, while still allowing its athletes to compete.
Prime Minister Scott Morrison said Australian athletes would compete at the Games despite the diplomatic boycott.
He said it should come as "no surprise" that Australian diplomats and politicians would boycott the event, citing the breakdown in the relationship with China in recent years.
"I'm doing it because it's in Australia's national interest," he said. "It's the right thing to do."
Mr Morrison said Beijing's own diplomatic freeze on Australia had also fed into the decision for officials to boycott the Games, because Australia had been unable to raise its concerns about human rights directly with Chinese leaders.
"We have been .. very happy to talk to the Chinese government about these issues and there has been no obstacle to that occurring on our side," he said.
"But the Chinese government has consistently not accepted those opportunities for us to meet about those issues.
"So it's not surprising therefore that Australian government officials would not be going to China for those Games."
The Games begin in February next year.
The ABC has confirmed the boycott will extend to Australian officials who are already in China.
China's embassy put out a statement only a few hours after the Prime Minister's announcement playing down the significance of the government's decision.
"Australia's success at the Beijing Winter Olympics depends on the performance of Australian athletes, not on the attendance of Australian officials, and the political posturingby some Australian politicians," the spokesperson said.
"The Australian side's statement that it will not send officials to the Beijing Winter Olympics runs counter to its publicly pronounced expectation to improve China-Australia relations."
Australian officials will boycott the Beijing Winter Olympics.(Reuters: Tingshu Wang)
Labor backs boycott
Labor had already declared its support for a diplomatic boycott, and Shadow Foreign Minister Penny Wong said the opposition backed the government's decision.
"We hold deep concerns about ongoing human rights abuses in China, including towards Uyghurs and other ethnic and religious minorities, and about athlete safety given questions about the treatment of tennis player Peng Shuai," she said in a statement.
"This decision, alongside other countries' diplomatic boycotts, sends a strong signal that these are not the behaviours of a responsible global power."
The Australian Olympic Committee (AOC), which expects to send around 40 athletes to the Games, said the decision was a "matter for government" and that athletes were focussed on competing in Beijing.
"Getting the athletes to Beijing safely, competing safely and bringing them home safely remains our greatest challenge," AOC chief executive Matt Carroll said.
"Our Australian athletes have been training and competing with this Olympic dream for four years now and we are doing everything in our power to ensure we can help them succeed.
"Human rights are extremely important, but the considered view of diplomats is that keeping channels of communication open is far more impactful than shutting them down."
China has been criticised for alleged human rights abuses against ethnic minorities.(Reuters: Thomas Peter)
Earlier this week White House press secretary Jen Psaki said the US government would boycott the Games in light of China's "ongoing genocide" and "crimes against humanity" in Xinjiang.
Uyghur representatives outside China have long called for the Games to be relocated.
Backbenchers on both sides of Australian politics have pressed for a diplomatic boycott, and are predicting that several other countries will follow suit.
New Zealand has already said it will not send any officials to the Games, although it hasn't linked that decision to human rights issues.
But the move is certain to further inflame tensions between Australia and China.
The relationship between the two countries has deteriorated further in recent months, after Defence Minister Peter Dutton declared that Beijing saw other countries in the region as "tributary states" and said it was "inconceivable" Australia wouldn't help defend Taiwan if there was a conflict between the United States and China over the self-ruled island.
Beijing has already lashed out at the United States over its diplomatic boycott, and warned it will take "counter-measures" against Washington.
Human rights groups have welcomed Australia's announcement, but are pressing the federal government to do more to target Chinese officials responsible for human rights abuses in Xinjiang.
China director at Human Rights Watch Sophie Richardson said the boycott was "a crucial step toward challenging the Chinese government's crimes against humanity targeting Uyghurs and other Turkic communities".
"But this shouldn't be the only action," she said.
"Australia should now redouble efforts with like-minded governments to investigate and map out pathways to accountability for those responsible for these crimes and justice for the survivors."