The unemployment rate fell to 6.8 per cent in November as a larger-than- expected 90,000 people joined the workforce during the month.
Economists had forecast a 40,000 rise in employment, with the jobless rate remaining at October's level of seven per cent.
"It's terrific news," Prime Minister Scott Morrison told 2SM radio shortly after the data was released on Thursday.
Earlier this week, the Reserve Bank said the jobless rate is now unlikely to reach eight per cent as previously feared.
Treasury is expected to have upgraded its unemployment forecasts when Treasurer Josh Frydenberg hands down his mid-year budget review later in the day.
"Overall, the data confirm that the recovery is now well-entrenched," BIS Oxford Economics chief economist Sarah Hunter said.
"Not unexpectedly, Victoria is responsible for the majority - 80 per cent - of the increase in employment in November, with the easing of restrictions in Melbourne allowing many businesses to re-open and take on staff."
Australian Bureau of Statistics data shows 84,200 full-time jobs were created in the November, along with 5800 part-time positions.
The participation rate of those people in work or seeking employment rose to 66.1 per cent from 65.8 per cent.
