Australian and New Zealand residents will be able to travel between the two countries without having to quarantine themselves from April 19.
New Zealand Prime Minister Jacinda Ardern announced the decision on Tuesday.
Since October, New Zealand travelers have been allowed to enter most Australian states without quarantine, but this has not been reciprocated.
Both countries have since brought Covid outbreaks under control and kept infection rates near zero.
Countries closed their borders in March last year and imposed a mandatory quarantine on returning nationals.
When outbreaks emerged, Australia and New Zealand instituted instant lockdowns to prevent the spread of the virus.
Ms Ardern hailed these aggressive responses as the key to opening the travel bubble.
“I cannot see or point to any countries in the world that maintain a strategy to keep their countries completely free from Covid, while opening up to international travel between them,” she said.
“It means, in a way, you know, we’re the world leaders.”
Australian Prime Minister Scott Morrison welcomed Ms Ardern’s decision, while noting that her country’s border had been open to New Zealanders for almost six months already.
“We made sure that our two countries … did not experience the same types of viral impacts that we have seen in so many other countries,” he said.
“The fact that we can now combine again will mean more jobs, will mean people will come together.”
Australia has recorded 909 deaths since the start of the pandemic, while New Zealand has reported 25.
How would the bubble work?
New Zealand will establish “green zone” conditions similar to those faced by its citizens upon entering Australia.
Passengers traveling to New Zealand will need to have spent the 14 days prior to the flight in Australia only. Airline crews should only have worked on low risk routes.
People with cold or flu symptoms will not be allowed to travel, and all passengers must wear masks and give New Zealand authorities details of where they will be staying.
Ms Ardern warned that travel arrangements could change “in the event of an epidemic” – in the same way that Australia has twice briefly halted travel from New Zealand.
But she said New Zealand would view doing business in Australia “as a region of ours when making decisions on restrictions.”
If several cases of unknown origin were to emerge, “we would probably suspend flights for a specified period,” she added.
Other conditions may also be introduced, including pre-departure testing for people in affected areas.
“These precautions are all part of our preparation to keep Covid out,” she said.
“Both countries have had border incursions and I know neither of us is interested in exporting Covid to the other country.”
About 1.5 million Australians visited New Zealand each year before the pandemic – about 40% of international visitors to this country.
Ms Ardern said she expected most travelers on early trips to see family and friends – but added that the upcoming ski season would be an attraction as well.
Australia’s national carrier Qantas has said it will resume 122 round-trip flights to New Zealand per week once the bubble goes into service.
This travel bubble is believed to be the second in the world, after the one that opened between the islands of Taiwan and Palau last week.
Australia and New Zealand have also previously raised the idea of separate travel bubbles with low-risk locations like Singapore, Taiwan, and several Pacific island nations.