Snepo have built the Fundawear garments, which contain small vibrating and pulsating actuators that can be remotely controlled via a mobile phone app, the Herald Sun reported.
The idea is to allow couples separated by distance to remotely stimulate each other - and the garments have quickly gained worldwide attention.
"After the laughter had stopped, we knew it was going to be an awesome project," Snepo owner and director Ben Moir in a video posted online about the product said.
A team of three engineers and a number of fashion designers have been working on the undies in Sydney since January.
They were developed for condom maker Durex Australia and the company has posted a video online showing an Australian couple trying them, while talking over a Skype-type service.
Billie Whitehouse, an Australian fashion designer who worked on the project insists the garments are comfortable, despite the electronic gadgets inside.
The undies are still at the experimental stage and Durex has not yet decided whether to make them widely available.
But a source close to the project said they were an entirely viable product for the mass market.
According to the firm's Fundawear Facebook page, couples can volunteer to become involved in further trials.