"Let's just make Australians safer over Christmas", Bill Shorten said on Thursday evening.
But in an eleventh-hour twist, Labour said that despite its reservations, it would pass the bill in the Senate, on the proviso that the coalition agreed to its amendments next year.
Thursday was the last sitting day for the Australian parliament this year.
As reported by Fortune, the bill was condemned by security experts who claimed the "backdoors" would weaken security in the nation by creating "a target for other countries' spy agencies and corporate spies who might want to see what people are discussing".
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The bill provides for fines of up to A$10 million (US$7.2 million) for institutions and prison terms for individuals for failing to hand over data linked to suspected illegal activities.
Many messaging apps that are being used by a majority of Australians offer encryption as either the standard or as an option, including Facebook Messenger and WhatsApp. The next session is in February so the impasse could delay the law for months with an election due by May.
The conservative government has argued police need greater powers to access personal communications to thwart terror attacks and organized crime.
Under the law, Australian security services can force local and global communications giants such as Google, Facebook or WhatsApp to remove encryption, help hide government snooping and hand over data linked to suspected illegal activities. "I want to see our police have the powers they need to stop terrorists".
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When the Federal Bureau of Investigation asked Apple in 2015 to unlock the phone of one of the shooters in the San Bernardino attack, Apple declined, citing the threat of such a back door.
Apple said in a public submission to legislators that providing access to encrypted data would necessitate weakening the encryption and would increase the risk of hacking.
The Digital Industry Group, an industry association whose members include Facebook and Google, campaigned against the bill in a loose alliance with Amnesty International and the Human Rights Law Centre.
"Several critical issues remain unaddressed in this legislation, most significantly the prospect of introducing systemic weaknesses that could put Australians' data security at risk".
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If the bill does become law, Australia would be one of the first nations to impose broad access requirements on technology companies, but others may follow. "This is not about politics, this is about Australia's national security", Morrison said, according to Australian news site news.com.au.