Queensland's attorney-general could become the moral arbiter of roadside billboards if advertisers post sexually explicit images.
A state parliamentary review into outdoor advertising was set up in April after the Australian Christian Lobby presented the government with a petition demanding a crackdown on sexually explicit images and slogans.
Nine months later, MPs on the bipartisan inquiry recommended an industry body be set up with the power to sanction an advertiser even if no complaint is made.
If an advertiser breaches its ruling, the Department of Justice or Attorney-General Jarrod Bleijie would "pre-vet" future outdoor ads.
Advertisers posting sexually explicit material would also be fined, with penalties increased for subsequent offences.
Revenue would be used to fund complaints management.
The politicians also want stronger advertiser guidelines so images of sex or nudity are not placed in areas frequented by children.
Billboards should also display information on where to make a complaint, the inquiry recommended.
Trevor Ruthenberg, who chaired the inquiry into sexually explicit outdoor advertising, said measures were needed to crack down on "rogue companies that do not act in the best interest of their communities".
He hoped other states would follow.
"We believe our recommendations will provide an excellent platform for other jurisdictions to strengthen their own legislation if required," Mr Ruthenberg said.
Christian and religious groups argued in favour of more regulation of outdoor advertising, to combat the sexualisation of children.
But industry groups, including the Outdoor Media Association, backed the existing system of self-regulation.
The inquiry received more than 200 submissions.
