The legislation could see several hundred inmates held at the US naval base in Guantanamo Bay to trial after years of detention.
Not one of the detainees held there over the past five years has been tried.
However the legislation also allows the United States to detain alleged terrorists indefinitely.
Hicks was one of 10 inmates originally charged and set to go before the military commissions before they were ruled invalid by the US Supreme Court in June.
The Adelaide-born man is now expected to be one of about 75 inmates to be earmarked for trial under the revised military commissions.
Other Guantanamo inmates expected to be tried by the commissions include Khalid Sheikh Mohammed, the accused mastermind of the September 11 terror attacks.
Officials say no trial dates have been set.
Terror law
The controversial new law signed off by the US President allows secret overseas CIA prisons, harsh interrogation practices and military trials against suspected terrorists.
Mr Bush said that the law endorses strategies that have prevented terrorist attacks on the United States and sends a clear message to those threatening America.
"This nation is patient and decent and fair, and we will never back down from the threats to our freedom," Mr Bush said at a White House signing ceremony.
"With the distance of history, the questions will be narrowed and few: Did this generation of Americans take the threat seriously, and did we do what it takes to defeat that threat? Every member of Congress who voted for this bill has helped our nation rise to the task that history has given us," he said.
Mr Bush wasted no time in using the measure against Democrats who opposed it, accusing them of being soft on terrorism.
The law was approved just three weeks before key elections to decide control of the US Congress.
Republican House Speaker Dennis Hastert bluntly charged that the Democrats hoped to "gingerly pamper the terrorists who plan to destroy innocent Americans' lives."
Mr Bush dismissed claims ignores the Geneva Convention on wartime prisoners and allows interrogation bordering on torture.
"This bill complies with both the spirit and the letter of our international obligations. As I've said before, the United States does not torture. It's against our laws and it's against our values," he said.
Rights groups ‘outraged’
The American Civil Liberties Union called the new law "one of the worst civil liberties measures ever enacted in American history."
"The president can now … indefinitely hold people without charge, … put people on trial based on hearsay evidence, [and] authorise trials that can sentence people to death based on testimony literally beaten out of witnesses,” said executive director Anthony Romero.
Michael Ratner, president of the Centre for Constitutional Rights, argued that the law denies detainees the cornerstone legal right of habeas corpus, "the 'Great Writ' protecting people from arbitrary detentionn, disappearance and indefinite detention without charges."
"While I'm convinced that this law will not stand in court, we are still facing at least a year of challenges before it is declared unconstitutional," he said.