The Australian Crime Commission (ACC) report said the drug - known as "ice" - posed the highest risk to Australian communities of any illegal substance.
It also found that the purity of the drug had increased over the past few years, making it even more dangerous.
Methylamphetamine comes in a range of forms, with the crystal "ice" variety the most common in Australia.
The price of crystal meth in Australia is among the highest in the world, the report found, driving the country's organised crime gangs to trade increasingly in the drug.
According to the report, gangs supplying the drug were also mixing other illegal substances into crystal meth in an attempt to increase addiction levels.
The ACC said there had been a "considerable increase in the number and weight of detections at the Australian border" without any decrease in domestic production.
It said Mexican drug cartels were becomingly increasingly involved in supplying the drug abroad, working with distribution networks in other countries such as Australia.
The precursor chemicals used by Australia's domestic producers to "cook" the drug were being increasingly imported from India and China, it found.
Chris Dawson, chief executive of the ACC, said the "availability and addictive nature" of crystal meth had "created new demand in urban, rural and disadvantaged communities".
"Ice is a devastating, insidious drug. It affects everyone from users, their families, and their communities, and the authorities who deal with the users," he said.
In November last year, New South Wales police seized more than 800 kilograms of methylamphetamine, along with two tonnes of MDMA - worth a combined estimated street value of A$1.5bn (Â£800m; $1.2m).
And earlier this month, police discovered 230 kilograms of liquid methylamphetamine in a consignment of 20,000 bottles of flavoured water destined for a Sydney warehouse.
The ACC report recommended a "collective national response" to deal with the drug's increasing prevalence.
"Everyone plays a role in the fight against illicit drugs - including governments, law enforcement, health, education, industry, non-government organisations and the community," Mr Dawson said.
More than 60% of Australia's major organised crime figures now deal in crystal meth, a new report has found.