The announcement came as the world marks the 80th anniversary of the liberation of the Auschwitz concentration camp.
"We must never forget the atrocities of the Holocaust," Mr Albanese said in a statement.
"The centre will serve to educate our young Australians about the horrors of the Holocaust and teach them from an early age that such prejudice, hatred and violence has no place here. Not now, not ever."
The government anticipates the new centre, to be built in partnership with the ACT's Jewish Community, will have 165,000 schoolchildren visit each year.
The government is matching the coalition's $2 million pledge to support the Holocaust Institute of WA which runs community education about the Holocaust and the October 7 attack.
Opposition Leader Peter Dutton will visit the institute on Monday to attend a service for the anniversary.
Mr Albanese has also vowed Australia will use the full force of the law to combat "vile" anti-Semitism across the nation.
"It (anti-Semitism) stands in vile opposition to all we are as a nation and all that we have built - together - over generations," he said.
Six million Jewish people were systematically murdered in the Holocaust by the Nazi German regime.
In Australia, cars have been set alight, a synagogue burnt down and anti-Semitic slurs painted on buildings and cars in attacks that have escalated since December.
A Sydney childcare centre near a synagogue was badly damaged last Tuesday when it was targeted in an arson and graffiti attack.
There have been a number of anti-Semitic attacks in Australia, prompting Jewish community protests. (Steven Saphore/AAP PHOTOS)
Authorities believe "criminals for hire" are behind a spate of anti-Semitic attacks, as police investigate the possibility of overseas actors or individuals funding the targeting of Jewish communities.
"Jewish Australians are integral to the story of Australia, and to the even greater future within our reach," the prime minister said.
"Australia proudly welcomed so many survivors of the horrors of the Holocaust, offering refuge and hope. We embraced the Jewish community then, and we embrace you now."
Mr Albanese spoke of the devastation felt when witnessing the "horror, destruction and brutality" inflicted by Hamas on October 7 when it launched its attack on Israel, saying it was reminiscent of the "dark and painful stories of the past".
Foreign Minister Penny Wong and Attorney-General Mark Dreyfus have travelled to Poland to attend the service marking the liberation of Auschwitz, which will take place early Tuesday morning, Australian time.
British King Charles will also attend.
About 1.1 million people were murdered in the concentration camp before it was emancipated on January 27, 1945.