A wide-ranging shake-up of the Classification Act could be on the cards if there is no agreement to change the rating system for computer games.
Any change to the classification system needs unanimous support from the Commonwealth, states and territories.
The Federal Government has given state and territory attorneys-general until July to decide whether to introduce an R18+ classification for video games.
Home Affairs Minister Brendan O'Connor says after a decade of debate, it is crunch time.
"We're becoming the laughing stock of the developed world, where we're the only country that doesn't have an R18 classification level for video games.
"I foreshadow that if there is not a consensus around this issue, the Commonwealth will certainly be considering other options because we cannot continue to have an outdated classification system that's actually, in my view, causing harm to young people."
The Federal Government says reforming the system will help protect children, inform parents and give ***** gamers more choice.
"I'm not going to let this matter end because it's too important to allow one or two jurisdictions to stop the majority of jurisdictions in this country moving on an important reform," Mr O'Connor said.
"But can I say my very strong preference is to have consensus around the table in July."
Kat Nicholson from the lobby group Gamers4Croydon says it would help protect children and give *****s more choice.
"It would be better for gamers. It would be better for children. It would be better for their parents. It would be win-win for all concerned," she said.
Currently in Australia games classed above MA15+ are refused classification and cannot be brought into the country.
Groups supportive of a R18+ classification for videos games have said many video games that are rated 18+ overseas are being squeezed into the MA15+ rating in Australia, meaning they are in the hands of a younger audience.
Only a small number of video games have been banned from release in Australia, with companies preferring to submit an edited version of a game for classification.
The Australian Christian Lobby has led the charge against introducing an R18+ classification, saying it would make it easier for children to access violent games.
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Government threatens R-rating games showdown
