Australia's prime minister appeared to suggest that her country may yet become a republic in the coming years as she praised the Queen for a lifetime of service.
Julia Gillard told the monarch during a reception staged in her honour that it was not known where Australia's future as a nation lay but it remained a "country on the move".
The politician praised the monarch for her "long, eventful and greatly productive" life that had remained true to the pledge she made in Cape Town 64 years ago when, as Princess Elizabeth, she devoted herself to the service of the British people and the Commonwealth.
In response the Queen paid tribute to the economic, social and industrial strides Australia had made since her first visit in 1954, and how it played its part on the world stage making significant contributions to peace-keeping efforts.
Every element of Australian society from MPs and High Commissioners to charity chiefs and gallery directors were invited to Parliament House for the reception hosted by Ms Gillard in tribute to the Queen and Duke of Edinburgh.
During the evening the prime minister said in her speech: "Your majesty, we do not know where Australia's path of nationhood may lead in the times to come. We are, as you once so rightly said, 'a country on the move and will go on being so'.
"But we know this for a certainty: Your journey of service will continue, keeping faith with the pledge made in Cape Town so many years ago."
Ms Gillard is in favour of Australia becoming a republic and speaking ahead of last summer's general election, the politician stated the death of the Queen would be an "appropriate point" for the country to end the tradition of having a British monarch as head of state.
The Queen said in her speech that Australia had "flourished and achieved excellence on the world stage". She also praised the sacrifices made by Australians fighting in Afghanistan.
She said: "Their valour has been well recognised, in particular with the awarding of the Victoria Cross to two servicemen for outstanding bravery in Afghanistan. I also share the grief felt by those families, friends and colleagues of the 29 service personnel who have been killed during this conflict."