Philip Morris Factory is a Smoke-free Zone

The American tobacco giant Philip Morris has turned its Australian headquarters into a smoke-free workplace, in a move that anti-smoking campaigners have hailed as a breakthrough.

The factory and offices in the Melbourne suburb of Moorabbin have been fitted with specially ventilated smoking areas away from the work zones.

The company's 800 employees will also be allowed to take a cash payout of $7,800 (£2,800) instead of accepting the free cigarettes which Philip Morris normally hands out to its employees.

The move was welcomed by campaigners because Philip Morris - the multinational behind brands including Marlboro and Benson & Hedges - has traditionally used its corporate muscle to prevent such changes taking place.

In 1995 the company managed to be exempted from workplace anti-smoking laws in New York, after it threatened to move its headquarters out of the city.

Todd Harper, the director of the Quit Victoria anti-smoking campaign, said he hoped that the move would herald a wider ban on workplace smoking.

"They haven't fully come clean on the issue of smoke-free workplaces, but it's good that they recognise the importance of working in a smoke-free environment," he said.

But Philip Morris's corporate affairs director, Thomas duBois, was careful to skate around the issue of whether there was a medical risk in workplace smoking, and stressed the decision had not been taken out of fear of litigation. "It causes fatal disease, whether you're a smoker at Philip Morris or not," Mr duBois told ABC radio. "We have to, as a company - maybe especially our company and the industry we're in - we have to stay tuned to changes in attitude and public perception."

The company has not always been so accommodating. Earlier this month it was reported to have tried to influence Australian regulations on workplace ventilation so as to play down the importance of environmental tobacco smoke.