Mr Albanese will compare the impact of AI on society to that of commercial air travel 100 years ago, promising to establish an office of AI within his department.
In a major speech to the University of Sydney on Wednesday, the prime minister will detail Labor's approach to the issue after months of pressure from the tech industry and advocates who are concerned about the rapid shifts in the global economy.
The plan will help Australia shape how AI is used and harness its benefits, said the assistant minister for science, technology and the digital economy, Andrew Charlton.
"There are many different departments within government that have equities in this space. So the prime minister is bringing national leadership to the issue," he told ABC Radio National on Wednesday.
Mr Albanese will also outline an "Australian approach" to large data centres, Dr Charlton added.
"We want to learn the lessons from abroad, where so many of those data centres have been rolled out in ways that have damaged local communities, that have sucked up energy, that have impacted local drinking water sources. We don't want to make those mistakes in Australia," he said.
The speech comes in response to concerns surrounding rules governing the use of AI, data centres and protections for Australian intellectual property.
AI company Anthropic has sought clarification over copyright settings, but hasn't reportedly sought an exemption.
The prime minister's speech isn't expected to detail changes to copyright laws, but will argue the right guardrails around the technology will attract business investment.
"Getting this right will enhance our appeal to international investors, by delivering greater clarity and speed for approvals, and a streamlined process for verifying compliance," he will say.
"But just as government developed co-ordinated approaches for other significant technologies: from civil aviation in the 1920s to genetics in the 1990s, we must do this with AI as well."
The prime minister will point to the attorney-general's consultation on copyright and artist protections where AI training is involved, along with Treasurer Jim Chalmers' responsibility for the "pivotal role" of AI in the government's productivity agenda.
Mr Albanese will say this comes in addition to work being done to mitigate risks that chatbots pose to children, to AI in defence and national security.
"We know that both extremists and state actors already use AI to create propaganda aimed at young people - and to spread disinformation that targets democracies," he will say.
Independent MP Allegra Spender said there was significant concern in the community about AI's impact on privacy and children, arguing the government should have acted sooner.
"It is right that the government is trying to be more on the front foot on AI. Frankly, I wish they had done this earlier," she told Nine's Today Show on Wednesday.
Labor MP Ed Husic, a former industry minister, said giving big tech social licence was a path "sadly doomed to failure".
"We tried self-regulation for ... a couple of decades, found out that it didn't work, and it won't work on a financial basis for these firms," he told Sky News on Tuesday.
"None of these firms will go one out from the other to bring in guardrails to limit the risks."
