Australia is to withdraw most of its troops from the south of Afghanistan by the end of the year.
Defence minister Stephen Smith also said that the multinational base at Tarin Kowt, and the NATO airfield in Uruzgan would close by the close of 2013.
Smith said: “It is a necessary and logical and natural consequence of transition being effective.
“The effect of that closure will be that Australia will no longer have a permanent presence in Uruzgan province, and the majority of Australian defence force personnel will return.”
The Australians have around 1,600 troops in the country, and have lost 39 in the war.
There has been no decision on whether Australian special forces will remain in the country after the end of the year, or even beyond the 2014 deadline for the withdrawal of the majority of coalition troops from the country.
The decision to close the base has been confirmed by the International Security Assistance Force, according to ABC report on Tuesday.
"We've been there for over a decade, and that's far too long," Smith said in Canberra.
"The effect of that closure will be that Australia will no longer have a permanent presence in Uruzgan Province and the majority of Australian Defence Force personnel will return from Afghanistan to Australia.
"Whilst there will be some movement in the numbers and while we are redeploying and repatriating both personnel and equipment, the numbers will go up and down, we expect that by the end of the year we will see at least 1,000 Australian personnel return home."
About 1,300 Australian soldiers are based in Uruzgan and the rest are in the major centres of Kandahar and Kabul.