Paraquat and diquat will remain available for use after the Australian Pesticides and Veterinary Medicines Authority delivered its final decision on Tuesday following a 30-year review into the chemicals' impacts on human health and the environment.
"Both chemicals remain available for use with significant new restrictions on application rates and permitted uses," the chemical regulator's chief executive Scott Hansen said.
New restrictions mean backpack sprayers will be phased out for enclosed mixing and loading systems and more personal protection equipment will be required.
The maximum rate of application will also reduce from 1150 grams per hectare to 231g/ha, although technology-assisted spot-spraying will allow higher rates capped at 30 per cent of the total area.
Pesticide Action Australia executive director Josh Davis said the regulator's view on the products stood in contrast with Australia's leading neurologists and global experts.
The highly toxic herbicide linked to Parkinson's disease - which is used on crops such as cotton, rice and wheat - has been banned in about 70 countries, including China, the world's largest producer of the chemical.
"(It) endangers not only farmers and their families, but also rural communities and the general public as we will all continue to be exposed to this toxic chemical through ongoing low-level dosages in food, water and air," he said.
"The clusters of Parkinson's disease in rural communities is far higher than in non-rural communities, and it's not just Parkinson's disease, but also rates of cancer, motor neuron disease and infertility."
He claimed a conflict of interest, saying the regulator is the only one in the OECD to be majority funded by the industry it regulated.
The National Farmers' Federation defended the APVMA's independence and said the products were critical for farmers during variable seasons and the growing demand for food and fibre.
While acknowledging community concern, president Hamish McIntyre said modern agricultural chemical use operates under strict science-based safeguards designed to protect farmers, workers, and the environment.
"No one wants to see farmers put at risk, and decisions must continue to be guided by robust scientific evidence," he said.
The regulator's new restrictions arose from detailed data showing acute toxicity risks for human handlers and impacts on animals foraging in treated areas.
"In making its decision, the APVMA found the weight of evidence does not show that paraquat exposure through approved uses increases the risk of developing Parkinson's disease," it said.
Parkinson's Australia, which has led a campaign to ban the products, slammed the regulator's "shocking" decision, with chief executive Olivia Nassaris warning of an impending epidemic.
She estimated the rate of Parkinson's would triple by 2050.
"The APVMA has failed not only farmers who use paraquat but all the other Australians exposed to it," Ms Nassaris said.
Grain Producers Australia said the decision ensured ongoing access to two critical weed management tools that underpinned minimum and no-till farming systems.Â
"These systems have delivered enormous productivity gains while helping growers protect their soils, conserve moisture and reduce their environmental footprint," GPA spokesman Andrew Weidemann said.
