The benchmark S&P/ASX200 index closed up 64.5 points, or 1.39 per cent, at 4714.9 points, while the broader All Ordinaries index gained 61.2 points, or 1.32 per cent, to 4714 points.
"It is quite amazing, it just keeps surging ahead and is taking few prisoners on the way up," said Austock Securities senior client adviser Michael Heffernan.
"All the sectors are up very strongly ... it just continues on the surge we have seen this financial year," Mr Heffernan said.
"We are surging to an almost 50 per cent rise compared to March 6," he said.
Among the major miners, BHP Billiton was up 59 cents, or 1.51 per cent, at $39.59 and rival Rio Tinto gained $1.32, or 2.19 per cent, to $61.50 on the back of stronger commodity prices.
Gold miners were mixed despite continued strengthening in the price of the precious metal.
Lihir Gold put on three cents to $3.18, Newcrest rose 27 cents to $35.22 and Newmont lost four cents to $5.45.
At 16:15 spot gold was trading at $US1022.00 per fine ounce, up $US5.43 on yesterday's closing price of $US1016.57.
Among the major lenders, Commonwealth Bank gained 89 cents to $49.29, Westpac rose 32 cents to $24.87, NAB lifted 50 cents to $29.55 and ANZ ended up two cents at $22.85.
"The banks have been helped by the positive mood of the market, and the Reserve Bank indicated in their minutes yesterday that they won't be racing to increase interest rates," Mr Heffernan said.
In energy stocks, Woodside Petroleum finished 78 cents stronger at $51.60 but touched an intraday high at $52.98 after news of an oil discovery off Africa's west coast.
Oil Search ended up nine cents to $6.49,t Origin Energy fell six cents to $15.20 and Santos fell seven cents to $15.47.
Media stocks were mostly up, with News Corp (the parent company of the publisher of news.com.au) rising 14 cents to $16.50 and the company's non-voting scrip up two cents to $14.12.
Fairfax Media rose 4.5 cents to $1.72 and Consolidated Media declined two cents to $3.01.
The private family company controlled by John B Fairfax, indicated it would not support the re-election of Ron Walker as chairman of Fairfax Media at the annual general meeting.
Shares in Telstra ended two cents stronger at $3.26 after Fitch Ratings said the Federal Government's plans to break up the teleco giant would have no immediate effect on the company's ratings.
Shares in regional pay television operator Austar rose five cents to $1.25 after the company said it had extended the term of most of its senior debt facility by three years.
On the Sydney Futures Exchange at 16:15 (AEST), the September share price index contract was 29 points higher at 4691 on 9,454 contracts.
