Australian Prime Minister Tony Abbott added one more to his growing collection of gaffes in public speaking, when he confused Tasmania and China - right in the presence of Chinese President Xi Jinping.

The prime minister was toasting President Xi at a special dinner at Parliament House on Monday when he made an attempt to sum up the developments of the day pertaining to Xi's visit.

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The two nations had just signed an agreement on a free trade deal, and Abbot was reporting on it when he inadvertently confused the island state with the largest Asian nation.

"To mark President Xi's visit, Australia and Tasmania and, and... we've said a lot about Tasmania, haven't we? Australia and China have reached agreements. It's hard to confuse Tasmania and China - but I have," Mr Abbott said, jokingly shrugging off the error.

President Xi and Chinese First Lady Peng Liyuan were both smiling as Prime Minister Abbott corrected himself.

Later in the speech, Mr Abbott also praised the president's "remarkable" speech in parliament. He said he had never heard any other Chinese leader declare that his country would be fully democratic by 2050.

"When I listened to the president today, some of the shadows over our region and over our world lifted and the sun did indeed shine brightly," Mr Abbott said, citing an Australian proverb. "I thank you, Mr President, for this historic, historic statement which I hope will echo right around the world."

Mr Xi returned the love, saying he has felt right at home on his latest visit.

"We need to put one's self into the other's shoes and look at each other's intention from the other side's standpoint of view," Mr Xi said.

The Chinese leader and his wife  made a historic visit to Hobart later on Tuesday, meeting with schoolchildren and patting Tasmanian devils, and visiting Mount Wellington which was closed to bushwalkers earlier as part of the elaborate security preparations. 

TagsTony Abbott