PNG Prime Minister Peter O’Neill said cabinet will appoint an eminent persons committee to conduct the review and it would not affect Australia’s economy or border security.
Mr O’Neill’s announcement comes as Prime Minister Tony Abbott is due to travel for a week to the Torres Strait next month with senior ministers and government officials.
A spokesman for Mr O’Neill told SBS World News the timing was a coincidence.
In 1978 PNG and Australia signed the Torres Strait Treaty establishing the existing border.
"The borders that were imposed on Gulf people are unfair and we just want a fair go for our affected villages," PM O’Neill said in a statement.
"When Australia drew the border map and boundary lines, Australia also acquired ownership and user rights that belonged to the Trans Fly villages.
"The borders that were imposed on Gulf people are unfair and we just want a fair go for our affected villages"
"These Torres Strait border arrangements extinguished the hunting and fishing rights of Trans Fly villages and left many communities with no income and a bleak future."
Mr O’Neill said the 40th anniversary of PNG independence was the right time to correct the wrong.
"This is not fair and for 40 years no Government has ever stood up on behalf of Trans Fly villages," Mr O'Neill said.
"The people affected by this treaty are from a culture that accessed these waters and islands for thousands of years, then they woke up one day to find this was taken away from them."
In 1879 Queensland annexed the whole of the Torres Strait, and about 300 islands, right up to the coast of present day Papua New Guinea.
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Once valuable pearl shell, trochus and beche de mer fisheries motivated the colonial occupation and with it came control of an international shipping channel between the Pacific and Indian oceans.
In the 1960s, proposed PNG independence led to the inevitable question of what happens to the Torres Strait colonial border and 25,000 square kilometres of Queensland territory.
The signing of the Torres Strait Treaty left almost everything as it was with Boigu, Saibai and Dauan islands, just a few kilometres off the PNG coastline, remaining Australian territory.
Source: SBS
Mr O’Neill said he hoped Australia would co-operate with the review.
SBS has contacted Foreign Minister Julie Bishop's office and Torres Strait island leaders for a response.
