New Zealand's government and anti-smoking groups have praised Australia for refusing to back down against tobacco industry threats to challenge in court planned cigarette packaging laws.

Associate Health Minister Tariana Turia said Tuesday that New Zealand is watching the situation closely as it considers introducing similar laws. Anti-smoking groups have applauded Australia's Prime Minister Julia Gillard for refusing to back down following threats by rich tobacco companies.

Tobacco giant Philip Morris, the maker of Marlboro cigarettes, has said it would file a lawsuit against the Australian government over the legislation that would remove company logos from cigarette packages. The law would also restrict tobacco advertising and enforce increased use of health warnings on the packages.

Cigarette makers argue that the move illegally diminishes the value of their trademarking and have threatened to sue.

Prime Minister Gillard said the plan does not break any laws and that her government would not be intimidated by the tobacco industry.

If enacted, the new laws will make Australia the world's toughest country on tobacco advertising.

The United States is taking steps to have cigarette packages feature prominent warning labels and graphic images of the negative health effects of smoking, including diseased lungs, rotten teeth and the corpse of a smoker.

Plain cigarette packaging is expected to make smoking less attractive, especially to young people.

Philip Morris maintains that the move is a violation of a bilateral investment treaty between Australia and Hong Kong.

The international tobacco company made its legal threat Monday through its Asian subsidiary. If negotiations fail, the case will go to arbitration. A spokeswoman for Philip Morris International, Anne Edwards, told the Associated Press Tuesday that the company would anticipate billions of dollars in compensation. The legislation is to be introduced to Australia's parliament next month and would come in force in January of 2012.