The announcement on the sidelines of a Southeast Asia summit in Indonesia came after years of friction over political and economic issues including Chinese sanctions on Australian imports.
"I... confirmed the invitation from President Xi (Jinping). That I would accept an invitation and will visit China later this year at a mutually agreeable time," Albanese told reporters after meeting Chinese Premier Li Qiang for talks.
The trip would be the first visit to China by an Australian prime minister since 2016.
Albanese thanked Xi for the invitation and said his talks with Li were "constructive" and "positive", adding the two countries needed more dialogue to improve relations.
"This was an important meeting. I told Premier Li that we would continue to cooperate where we can, disagree where we must and engage in our national interest," he said.
Last November, Albanese met with Xi on the sidelines of the G20 summit on the Indonesian resort island of Bali.
- Australian delegation in China -
On Thursday, Australia sent a delegation of industry, government, academic, media and arts representatives to Beijing for a dialogue with their Chinese counterparts.
The dialogue was stopped in 2020, and its resumption is the latest sign of a thaw.
Australian Foreign Minister Penny Wong said last week the discussions illustrated "another step towards increasing bilateral engagement and stabilising our relationship with China".
China was angered by Australia's legislation against overseas influence operations, its ban on Huawei from 5G contracts, and its call for an independent investigation into the origins of the Covid-19 pandemic.
But relations appear to have warmed since the centre-left government in Canberra adopted a less confrontational approach to China following Albanese's election win last year.
But issues remain in the relationship.
Australia expressed "deep concerns" last month about the "ongoing delays" in the case of an Australian academic jailed in China on espionage charges.
Chinese-born Australian Yang Jun has been jailed since 2019 and said last month in a note shared with friends and family that he feared dying in prison if he did not receive medical attention.
Beijing said it was handling his case properly, and that it was "a country ruled by law".
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