Air pollution is as bad for your health as a poor diet or smoking and costs Australia an estimated $16 billion a year.
Health advocates say despite the damage, the country is falling behind global standards to reduce the environmental threat.
"The health burden that results from air pollution is completely unacceptable," Lung Foundation Australia CEO Mark Brooke says.
Dust, fumes, gas, smoke and mist in the air expose Australians to contaminants and exacerbate symptoms for people already impacted by lung disease or respiratory illness.
"We're losing thousands of lives a year to respiratory diseases such as lung cancer, and hospitalisation for children with asthma is on the rise," Mr Brooke said.
He has called on the government to develop a strategy informed by the World Health Organisation's existing guidelines, and to introduce policies to improve air quality.
Sunday is the United Nations' World Environment Day, aimed at increasing awareness and action for environmental protection.
The Lung Foundation says air pollution causes the same disease burden as more well-known health risks such as obesity and smoking, and could cause 3000 premature deaths a year.
Contributors to air pollution include the burning of fossil fuels, road traffic, construction, mining, bushfires, woodfires, and smoking.
In addition to respiratory diseases, air pollution is also linked to strokes, diabetes, newborn deaths, and neurological diseases such as Alzheimer's.