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They numbered a few hundred thousand before the European influx. But two centuries of discrimination and expropriation followed, and at one point the indigenous population fell as low as 60,000.
Australia's politicians at first looked to Europe and the US in foreign policy, but in the past 20 years or so they have made their near neighbours a priority.
The British founded the first European settlement in 1788 and named it Sydney. Many of the first settlers were convicts, but free settlers started to arrive in increasing numbers, particularly after the discovery of gold in the mid-19th century.
Today, just over 90% of the population are of European descent, with less than 3% descended from the indigenous Aboriginal population.
The government formally apologised in 2008 for the past wrongs committed against the indigenous Australians, who still suffer from high rates of unemployment, imprisonment and drug abuse.
The gradual dismantling of the "White Australia" immigration policy in the decades after World War II heralded an increase in the number of non-European arrivals.
Migration continues to shape Australia and is a politically-sensitive issue. The country has taken a tough stance on unauthorised arrivals, but has scrapped a controversial policy of holding asylum seekers in detention centres until their cases are heard.
Originally composed of six separate colonies of the British Empire, Australia's path to independent statehood began with the formation of a common federal state in 1901, and was largely complete by World War II. The last few remaining constitutional links with the United Kingdom were severed in 1986.
However, Australia remains part of the British Commonwealth, and the UK monarch remains the formal head of state, represented by the governor-general, who has a largely ceremonial role.
There is an influential republican movement and the debate over future of the monarchy is a recurring issue in Australian politics. In a 1999 referendum, nearly 55% of Australians voted against becoming a republic.
The country has federal structure, with the six states retaining extensive powers, particularly over education, police, the judiciary and transport.
Australia's growing orientation towards its Asian neighbours is reflected in its economic policy. It is a key member of Apec, the Asia Pacific Economic Cooperation forum, and aims to forge free trade deals with China and Asean, the Association of Southeast Asian Nations.
It has also played a bigger regional role, mediating between warring groups in Papua New Guinea and the Solomon Islands, as well as deploying thousands of peacekeepers in newly-independent East Timor.
The island continent combines a wide variety of landscapes. These include deserts in the interior, hills and mountains, tropical rainforests, and densely-populated coastal strips with long beaches and coral reefs off the shoreline.
Isolated from other continents, Australia has an abundance of unique plant and animal life.
