From January next year, eligible fathers and same-sex partners can receive the new payment, dubbed Dad and Partner Pay, at the rate of the national minimum wage.
Families Minister Jenny Macklin announced the payment today, saying it would be a win particularly for self-employed and casual workers who generally don't receive paternity leave from their employers.
She said it would help dads take more time off to bond with their newborns and help mothers right from the start.
To be eligible, fathers or same-sex partners must not have earned more than $150,000 in the previous financial year and must be on unpaid leave or not working to help care for their child during the two weeks.
They must have also worked 330 hours, or just over one day a week, in 10 of the 13 months before receiving the Dad and Partner Pay.
Fathers may be eligible for Dad and Partner Pay even if their partner is not receiving Paid Parental Leave.
Parents can apply for the payment up to three months before the expected date of birth or adoption.
The Australian Council of Trade Unions (ACTU) said the scheme would allow fathers to ask for leave without having to justify the request or have it rejected.
ACTU president Ged Kearney said it was wrong that some fathers and partners couldn't share the joy when a baby arrives, and welcomed the government's effort to bring parental payments into the modern era.
She said unions would continue to push for paid parental leave to be paid at workers' ordinary rates, and were talking to employers about topping up the minimum wage amount given to their workers.
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