Norfolk Island to be run by council

Norfolk Island, Australia's only self-governing offshore territory, will be stripped of its parliament which will be replaced by a council.

The historic change, which passed the lower house with Labor's support on Tuesday, means the 1800 islanders will be required to pay Australian taxes from July next year.

In return they will be entitled to social security payments, Medicare and the Pharmaceutical Benefits Scheme.

"These changes deliver equity to Norfolk Island and ensure residents have access to essential services that all Australians deserve," Federal Territories Minister Jamie Briggs told parliament.

"It also delivers much-needed governance reform."

The minister said a review was already underway into upgrading the island's rundown infrastructure, which hasn't been touched since the 1970s.

The tiny, tax-free island is 1400km off Brisbane