[1] Eutaxia diffusa was named by Victorian Government Botanist Ferdinand von Mueller in 1858, when his original description was published in the first volume of his Fragmenta Phytographiae Australiae.

The specific epithet derives from the Latin word diffusa, meaning spreading widely or loosely.

[1] The species was reclassified as a subspecies of Eutaxia microphylla in 1957 before Mueller's original name was reinstated in 2010.

[2] Eutaxia diffusa has a range that extends from Inglewood in Queensland southwards through New South Wales, where it is recorded in mallee communities, and in to south-western Victoria and westward across to South Australia.

Associated tree species include Eucalyptus behriana, Acacia trineura and Melaleuca lanceolata.