Horrific overcrowding of sheep on live export ships will be eased, but controversial voyages to the Middle East in stifling heat are set to continue.
Federal Agriculture Minister David Littleproud has accepted all 23 of the recommendations of livestock vet Michael McCarthy's review into the northern hemisphere summer trade, which will not be banned.
The review was commissioned by the minister after shocking footage was released showing almost 2500 sheep dying on a ship to the Middle East in 2016.
"The footage was disgraceful, but what you don't need to do is predicate your decisions on emotions, not facts," Mr Littleproud told reporters in Sydney on Thursday.
The number of animals on ships will be cut by up to 28 per cent, with up to 39 per cent more space on live export vessels.
The government has proposed tough penalties for dodgy exporters, with jail terms of up to 10 years for company directors and individuals.
Fines ranging between $420,000 for individuals and $4.2 million for companies will also be included in legislation to be introduced in coming weeks.
Any voyage with a mortality rate of more than one per cent will be investigated by the independent regulator, down from two per cent.
All sheep and cattle ships will have an independent observer on board to send vision and reports to the regulator on a daily basis.
"This is about getting truth and proof from those boats," Mr Littleproud said.
After Mr Littleproud ruled out ending the northern summer trade, his Western Australian counterpart Alannah MacTiernan left the door open for a state ban.
Labor's agriculture spokesman Joel Fitzgibbon said the federal opposition would stop the summer trade at the first opportunity, and phase out the wider industry over time.
The Australian Veterinary Association and the RSPCA had also called for a ban on the northern summer trade, which they say is not possible to do humanely.
But Mr Littleproud said people were kidding themselves if they thought the global demand for live sheep would go away.
"We have got a responsibility to stay and get it right. We have a responsibility to the animals, but also to our farmers."
Animals Australia's Lyn White said it was a "lily-livered" government response designed to protect exporters, not animals.
National Farmers' Federation president Fiona Simson backed the new measures, but admitted there was no guarantee sheep would no longer die in large numbers on export ships.
"What I can give the public a guarantee about is that it is a better system than we currently have," Ms Simson told reporters in Canberra.
"From the farmers' perspective, we need to fix it, not ban it."
But the government's reforms have not convinced rural NSW Liberal backbencher Sussan Ley to abandon her private bill to phase out the trade over five years.