The World Trade Organization on Tuesday agreed to set up a panel to examine China's imposition of duties on imported Australian wine, a trade source said.
The dispute settlement body, which met behind closed doors on Tuesday, agreed to Australia's second request after its first attempt was blocked by China in September, the source said.
Trade tensions between Australia and its largest trade partner have mounted in recent months, prompting Washington to voice support for Canberra.
China has imposed tariffs on Australian wine and barley and limited imports of its beef, coal and grapes.
Explaining the decision to seek a panel, Australia's delegate voiced disappointment that China had not taken concrete steps to respond to its concerns, the trade source said.
"China regrets that Australia decided to further its panel request with regard to the dispute," China's delegate said in a statement to Reuters.
"China will vigorously defend its legitimate measures in the following proceedings and is confident that its challenged measures are consistent with relevant WTO rules."
WTO panels typically deliberate for six months before preparing its ruling. The outcome can then be appealed.