Single-use plastics like coffee cups, straws and balloons could be banned by 2023 under the recommendations of parliamentary committee.
The major report into recycling also recommends a national container deposit scheme - similar to South Australia's program - to tackle Australia's growing waste woes.
Committee chair Peter Whish-Wilson said the report had support from across the parliament to tackle a crisis in the recycling industry.
"Australians are good recyclers, but they've been let down by local, state and federal governments," the Greens senator told parliament.
"Had we implemented this plan nearly 10 years ago in 2009 we wouldn't be in the crisis that we're in now."
The report recommends the federal government work with the states to put less rubbish in landfill and improve the quality of recycling.
The commonwealth would also set mandatory targets for government departments around recycled materials while pursuing sustainable procurement policies.
The phase-out of petroleum-based plastics by 2023 could include takeaway containers, plastic bags and chip packets.
"It's not going to happen straight away, but we absolutely need to commit to it and put in place a plan," Senator Whish-Wilson said.
He said the report's tri-partisan support was rare, with the coalition and Labor on board.