The Therapeutic Goods Administration's decision followed consultations,public submissions and a report by the Senate select committee on tobacco harm reduction.
In a statement announcing the decision,the TGA said the decision balanced consumer demand for the product as a smoking cessation aid and the potential for nicotine e-cigarettes to lead to addiction.
"A patient's doctor is uniquely placed to give the support required for long-lasting smoking cessation,"it said.
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"The long-term health risks of nicotine e-cigarettes use are still unclear and,at the time of making my final decision,the Therapeutic Goods Administration has not approved any e-cigarette product as a smoking cessation aid."
In response to the TGA's decision,the government will scrap contentious customs regulations,which included a fine of up to $200,000 for those illegally importing nicotine. The regulation wasopposed by a large group of backbenchers,and due to kick in from the start of next year.
Health Minister Greg Hunt said it was important to note that any doctor could prescribe nicotine-based e-cigarettes.