Importantly for law enforcement agencies, it also requires a single point of contact for the Government to deal with each company.
Ms Gillard says the impacts of online bullying can be significant because of the potentially large size of the audience and the anonymous way in which things can be said.
"It's true, I think, and part of human nature that people will say things that are sharper and harder under the cover of anonymity than they would say to someone's face," she said.
"And we see that in the online environment every day."
In response to the Coalition's online safety policy released last year, the Government said it had already established "cooperative relationships" with social networking sites, including Facebook, and that Twitter had agreed to work with the Australian Federal Police to identify so-called trolls.
But Ms Gillard is pressuring Twitter to sign up to the new agreement announced today.
"And I do call on Twitter to replicate what has been done by other major social media companies and embrace these guidelines."
As part of the new protocols, social media sites will be required to act on complaints promptly and provide users with an indication of how complaints are typically dealt with.
Representatives from each company will meet with the Government every six months to talk about emerging issues and trends in social networking sites.