The capital of Australia is Canberra, which is located in the Australian Capital Territory in southeastern Australia. Canberra has a population of about 367,000, making it the largest inland city in the country, but the eight largest city in all.Canberra covers an area of 814 square kilometers (314 square miles).he capital of Australia is Canberra, which is located in the Australian Capital Territory in southeastern Australia. Canberra has a population of about 367,000, making it the largest inland city in the country, but the eight largest city in all.