Australia has removed knights and dames from the national honours system, Prime Minister Malcolm Turnbull said Monday, dismissing the ancient titles as "not appropriate" in the modern age.

Knights and dames were unexpectedly revived last year by then prime minister and ardent monarchist Tony Abbott -- prompting accusations he was in a "time warp" and out of touch with voters.

Turnbull, an outspoken republican, had been widely expected to dump the titles ever since he replaced Abbott in a conservative Liberal Party room coup in September.

"The cabinet recently considered the Order of Australia... and agreed that knights and dames are not appropriate in our modern honours system," Turnbull said in a statement.

The prime minister said Britain's Queen Elizabeth had agreed to the government's recommendation to remove knights and dames from the Order of Australia, which recognises achievement and service.

"This change will not affect existing knights and dames," he added.

Speaking later to reporters in Sydney, Turnbull said the matter was "a long way from being the most important issue in Australia today".

Australian Prime Minister Malcolm Turnbull, pictured on October 17, 2015, removed knights and dames from the national honours system Fiona Goodall, AFP/File

But he added: "This reflects modern Australia; knights and dames are titles that are really anachronistic, they're out of date, they're not appropriate in 2015 in Australia."

Abbott's reintroduction of knights and dames in 2014 was questioned, but it was his subsequent decision to knight Queen Elizabeth II's husband Prince Philip which was met with ridicule and disbelief.

Republicans, who favour cutting Australia's ties to the British monarchy, had already accused Abbott of turning the clock back to a colonial mindset, while the Labor opposition said the titles should never have been brought back.

"It was a farce, a joke, a national disgrace," Labor MP Chris Bowen told reporters in Sydney.

"It is not appropriate in modern day Australia ... that we are clinging onto imperial Britain through our honours system, and we shouldn't be celebrating the fact that knights and dames are gone, we should be lamenting the fact that they came back under this government."

- Republic by stealth -

Australia has long wrestled with the idea of cutting ties to the British monarchy, but a 1999 referendum on the issue kept the traditional model under which Britain's Elizabeth II is head of state.

Support for a republic has ebbed in the years since, with a Fairfax-Nielsen poll in 2014 finding that 51 percent of the 1,400 people surveyed favoured the status quo while only 42 percent supported a republic.

The Australian Monarchist League said it was disappointed and concerned by Monday's development, accusing Turnbull of "republicanism by stealth".

"Mr. Turnbull is trying to bring on a republic and this is a way of starting it all off," the league's national chair Philip Benwell told AFP.

"We don't forget that Mr. Turnbull led republicans into the last referendum."

But Australian Republican Movement chair Peter FitzSimons welcomed the demise of knights and dames, saying their reintroduction reflected "Australia of the past, not the diverse and multicultural nation that exists today".

The mis-step over Prince Philip's knighthood was seen as one of the catalysts for a leadership challenge against Abbott in February, adding to flagging opinion polls and an unpopular budget.

He survived the first challenge after awarding the honour to the non-resident duke, dubbed a "knightmare" by the media, but was removed by Turnbull's challenge seven months later.

He has since admitted the decision was a mistake, describing it as "an injudicious appointment, obviously".

Knights and dames were introduced into Australia's system of honours in 1976 by then-prime minister Malcolm Fraser, but abolished a decade later by Bob Hawke.

Previously, Australians had been honoured through British imperial awards.