In the annual survey by Economist Intelligence Unit, Melbourne claimed second position, nudging Sydney down the list to seventh place.
Perth and Adelaide tied for eighth place.
Vancouver was recognised as the world’s most liveable city for the fifth consecutive year, with the Canadian west coast city scoring 98 per cent on a combination of stability, health care, culture and environment, education, and infrastructure.
"Mid-sized cities in developed countries with relatively low population densities tend to score well by having all the cultural and infrastructural benefits on offer with fewer problems related to crime or congestion," the report’s editor Jon Copestake, said in a statement.
Pittsburgh was the top US city with 29th place - just ahead of Honolulu - while Los Angeles moved up three places to 44th and New York held onto the 56th spot.
London moved up one place to 53rd while Paris came in at number 16.
The Top 10:
1. Vancouver, Canada
2. Melbourne, Australia
3. Vienna, Austria
4. Toronto, Canada
5. Calgary, Canada
6. Helsinki, Finland
7. Sydney, Australia
8. (equal) Perth, Australia
8. (equal) Adelaide, Australia
10. Auckland, New Zealand