The small island which is home to the National Carillon in Lake Burley Griffin will be renamed in June to mark Queen Elizabeth II's 70 years on the throne.
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Prime Minister Scott Morrison on Saturday announced Aspen Island would be renamed Queen Elizabeth II Island at a special event later in the year.
"Given the National Carillon was officially opened by Her Majesty in 1970, it is only fitting that Aspen Island should be renamed in recognition of her many years of service to Australia," Mr Morrison said in a statement released on New Year's Day.
"This ceremony will also include dedicating the new Queen Elizabeth Water Gardens, which will transform the nearby foreshore as well as improve water quality."
Celebrations to mark the jubilee will include the release of commemorative stamps and coins, illuminating monuments across Australia and lighting a platinum jubilee beacon in Canberra.
"Seventy years of service is a truly immense achievement, and we are proud to join with other Commonwealth nations to celebrate this milestone. Her Majesty has always held a deep affection and close connection with the people of Australia," Mr Morrison said.
The Australian Monarchist League welcomed the forthcoming name change and the Commonwealth's plans for other celebrations to mark the Queen's platinum jubilee.
"We are sure that the Australian people as a whole will particularly welcome the Prime Minister's announcement that one of the key events would be renaming Aspen Island within Lake Burley Griffin, Canberra, in The Queen's honour," the league said in a statement.
The carillon and Aspen Island are protected under Commonwealth heritage laws.
Aspen Island was formed from excavated material during the construction of Lake Burley Griffin, which was completed in 1964.
The National Carillon was a gift from the British government to mark 50 years since Canberra was established, and was built to a prize-winning design of Western Australian architects Cameron, Chisholm and Nicol.
Queen Elizabeth II officially opened the carillon on April 26, 1970, at a cold and windy ceremony on Aspen Island. About 25,000 people gathered on the surrounding shores of the lake.
"In a few moments the bells will be ready to play," the Queen said, after accepting the gift from the British government as Queen of Australia.
"Their harmony will be a reminder of the enduring ties of kinship between Britain and Australia."
A stretch of road on the southern side of Lake Burley Griffin was renamed Queen Elizabeth Terrace in 2012, to mark the monarch's diamond jubilee.
Opponents of the change started an online petition to keep the road named as Parkes Place, saying at the time the politician and father of Federation, Sir Henry Parkes, should not be bumped aside for the monarch.
"No British royal has more landmarks named in her honour than the present Queen,'' an petition organiser said. ''It is simply not right that our own national heroes should be ignored and have their monuments renamed."
Prince Charles and his wife Camilla, Duchess of Cornwall, officially renamed the section during a visit.
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