"People diagnosed with HIV can live a full and healthy life, with a normal life expectancy", he said.
In the early 1990s when the syndrome was at its peak, about 1,000 Australians died each year from AIDS.
New Zealand was following a similar trend, with just nine cases of AIDS reported past year.
The government-backed Australian Federation of AIDS Organisations (AFAO) and top scientists said the number of people being diagnosed with AIDS in Australia was now so small it was no longer reported. An estimated 13,712 people with an AIDS diagnosis died in 2012.
But of the approximately 150 AIDS notifications in Australia each year the majority of them present for HIV testing too late.
Worldwide there are 36.7 million people living with HIV, according to the World Health Organization, with 180,000 people dying from AIDS-related illness in the Asia-Pacific region past year.
Australia's claims are alarming, University of Otago AIDS epidemiology group lead researcher Sue McAllister said.
O'Donnell acknowledged that some may see this announcement as fuelling complacency over HIV, but "the alternative is much worse"..
"What we really need now is for government to release more resources to those communities and professionals so we can have the right mix of interventions".
Aids Foundation general manager of operations Nick Laing said that would run for about two years.
"We had community organizations of gay men, sex workers and drug users doing outreach campaigns that were extraordinarily effective", O'Donnell said.
AIDS advocates will now target the 35 million people around the globe who are living with HIV, particularly those countries the Asia-Pacific region, where 180 000 cases of AIDS and 1.2 million cases of HIV are reported each year. "We continue to keep this funding option under review as the relative priority of funding one medicine compares with other medicines can change over time", Pharmac said in a statement. Today the number is so low that they're not even keeping track.