ALI MOORE, PRESENTER: The live animal export industry faces tighter regulations under new rules set out today by the Government.

They're in response to the outcry over shocking evidence revealed earlier this year of animal cruelty in Indonesian abattoirs.

But the new rules won't make stunning mandatory, despite demands from animal rights activists.

Political correspondent Tom Iggulden reports from Canberra. And a warning this story also contains some disturbing images.

(Footage from Four Corners plays)

TOM IGGULDEN, REPORTER: These are the pictures of Indonesian abattoirs that took the industry, and the Government, by surprise.

After banning, then allowing live cattle exports to Indonesia, the Agriculture Minister's announced sweeping new rules.

JOE LUDWIG, AGRICULTURE MINISTER: Much stronger regulation right across our international markets.

TOM IGGULDEN: Chips will be implanted in livestock so they can be tracked from stockyard to slaughterhouse.

Each step of the process will have to conform with international standards and the system will face regular audits.

JOE LUDWIG: So the exporters themselves will have that responsibility to ensure those animal welfare outcomes are taken care of throughout that process.

TOM IGGULDEN: Farmer's are supporting the new rules.

JOCK LAURIE, PRESIDENT, NSW FARMERS ASSOCIATION: We're obviously very happy about this, happy the trade will remain open.

WARREN TRUSS, NATIONALS LEADER: The industry knows that it's permanently on trial, that it's always got to do everything perfectly.

TOM IGGULDEN: After criticising the export ban, even the Nationals are grudgingly onside with the new rules.

WARREN TRUSS: It's been another example of bad policy and bad management of an issue by the Government. Let's hope that we're now on a straight path to a better future.

TOM IGGULDEN: The new system won't come cheap.

LUKE BOWEN, NT CATTLEMAN"S ASSOCIATION: There is a cost, and ultimately the producers end up paying the cost.

WARREN TRUSS: There are no alternatives. They don't want to bear these costs but they need to trade to remain viable.

TOM IGGULDEN: But the new rules are likely to please animal rights activists, who say stunning livestock before slaughter is the only humane process.

JOE LUDWIG: We don't ourselves require stunning domestically, so it's a bit hard to enforce that on other countries. What we will do though, in relation to stunning, we will certainly advocate strongly in markets that they should approach and utilise stunning.

LUKE BOWEN: I haven't found one producer that doesn't agree with adoption of stunning. We also have to be sensible about it and understand that we can't mandate in another sovereign country.

TOM IGGULDEN: Independent MP Andrew Wilkie says he'll keep pushing for mandatory stunning by moving a Private Members Bill.

Today's new rules were announced on a day when politics was largely overshadowed by a reception for the Queen on day three of her visit to the capital.

(Footage of Julia Gillard being presented to HRH Queen Elizabeth II)

OFFICIAL: The Prime Minister Your Majesty.

JULIA GILLARD, PRIME MINISTER (bows and shakes the Queen's hand): Lovely to see you again.

HRH QUEEN ELIZABETH II: It was so nice to be able to do that.

TONY ABBOTT, OPPOSITION LEADER (shaking the Queen's hand): Lovely to be here Your Majesty.

TOM IGGULDEN: This afternoon both leaders met the sovereign.

HRH QUEEN ELIZABETH II: It's an interesting time.

TONY ABBOTT: It's never dull.

HRH QUEEN ELIZABETH II: (Laughs) No.

TONY ABBOTT: We play our politics tough in this country.

(Footage from official public reception)

TOM IGGULDEN: And this evening came the official public reception.

JULIA GILLARD: A true friend of this country.

TOM IGGULDEN: Both leaders touched on the republic debate.

JULIA GILLARD: Your Majesty, we do not know where Australia's path of nationhood may lead us in the times to come. We are, as you once so rightly said, "a country on the move" and will go on being so. But we know this for a certainty: Your journey of service will continue.

TONY ABBOTT: The Crown has been a symbol of stability and continuity because it has adapted to the changing times. Australians have rejected some change because they feared that it might not be real progress.

TOM IGGULDEN: For her part, Her Majesty acknowledged Australia's military sacrifice in Afghanistan and expressed her admiration for a country which she says has grown in self-confidence.

HRH QUEEN ELIZABETH II: And in the face of a global financial crisis, Australia's robust economic record, underpinned by the strength of its institutions, has been widely acknowledged.

TOM IGGULDEN: Tomorrow the Queen visits the Duntroon Military academy.

Tom Iggulden, Lateline.