With the Soviet Occupation of the Baltic States in June 1940, the Australian Government of Robert Menzies, like the British Government, did not recognise this action but the Minister for External Affairs, Sir Frederick Stewart, later confirmed in June 1941 that informal discussions had occurred that implied a "readiness on the part of the United Kingdom Government to settle on a practical basis various questions arising out of the Soviet annexation of the Baltic States.

By March 1949, in a Senate debate on the United Nations General Assembly's Third Session, the Minister for Health and Social Services, Senator Nick McKenna, noted the status quo of the situation:[6] "The Australian Government has not recognized, and does not intend to recognize, the absorption into the Soviet Union of the formerly independent republics of Latvia, Lithuania, and Estonia.

The Australian Government believes that these accessions by the Soviet Union cannot be said to have been made as a result of the clearly expressed wish of the people of those countries.

"[7] Australia was the only Western country to break ranks and briefly recognise the Soviet annexation of Lithuania (and the other Baltic states) as de jure for 17 months between July 1974 to December 1975 by the Whitlam Labor government, while most other countries continued to recognise the independent Lithuanian diplomatic missions.

It was something which took place as a result of a disgraceful, shameful and discreditable treaty signed in Moscow in 1939 between Stalin and Ribbentrop, the then nazi Foreign Minister.

[11][12] On 27 August 1991, Prime Minister Bob Hawke, announced Australia's decision to re-establish full diplomatic relations with Lithuania.

[14] On 13 November 1997, as part of a significant expansion of Australian Honorary Consulates, Foreign Minister Alexander Downer announced the appointment of Italian-Australian businessman who had been resident in Lithuania since 1991, Salvatore Antonio Meschino, as Australia's first honorary consul in Vilnius, Lithuania.

In February 2021, the Lithuanian Government established a resident Embassy to Australia in Canberra, replacing the previous arrangement of non-resident ambassadors of Lithuania to Japan.

[23] On 17–20 October 2023, the President of Lithuania, Gitanas Nausėda, undertook a state visit to Australia, including opening the Lithuania-Australia Business and Science Forum in Melbourne, and meeting with Governor-General David Hurley, Prime Minister Anthony Albanese, and the Premier of South Australia, Peter Malinauskas, who is of Lithuanian descent.

Lithuania's biggest imports are education-related/recreational travel, animal feed, and computer parts/accessories, and Australia's are fertilisers, refined petroleum, and miscellaneous chemical products.