The move gives the government authority to act on debts owed by GFG Alliance and secure the future of the mid-north operations.
Standing orders were suspended in parliament on Wednesday for the legislation to pass the lower and upper houses.
"GFG is no longer running the steelworks and associated mines," Premier Peter Malinauskas said.
GFG has been under intense pressure from the government to pay debts to creditors of the Whyalla Steelworks and the state, which is owed "tens of millions of dollars", including $15 million to SA Water.
Mr Malinauskas said the steelworks had been placed in the hands of an administrator to stabilise operations and explore a possible sale.
"It is unacceptable for such an important critical piece of economic infrastructure for the nation to be in a situation where its ongoing operations are so severely compromised," he said.
In Whyalla on Thursday, he would announce "one of the most comprehensive industry support packages that this nation has ever seen".
"Our mind turns to providing support for the industry and for the people that work within it, to be able to secure sovereign steel making in this country, not a bailout for GFG," the premier said.
The state has appointed KordaMentha as an administrator of OneSteel Manufacturing Pty Ltd under section 436C of the Corporations Act 2001.
OneSteel is part of the GFG corporate group and is the legal entity that owns and operates the Whyalla steelworks and associated mines.
KordaMentha has advised the government it intends to appoint an experienced special adviser to assist the administration and is engaging with parties including BlueScope.
The administrator is fully funded "and that will mean that bills get paid", Mr Malinauskas said.
The move comes after months of uncertainty at the steelworks and reassurances from its chairman, UK billionaire Sanjeev Gupta.
Last Friday, Mr Gupta said a debt settlement deal had been reached with creditors of global financier Greensill Capital, which had advanced billions of dollars in credit to GFG before it collapsed in 2021.
This week, he said the steelworks was turning over $13-$14 million a week and hoped to be breaking even by mid-year.
The company announced in January the plant had cast its first steel following a four-month shutdown that halted production and cost the company millions of dollars.
Minister for Energy and Mining Tom Koutsantonis said that since 2017-18, GFG had iron ore sales values totalling $7.825 billion from its SA operations and steel sales of $4.8 billion since 2019-20.
"In the same period, we have seen nearly $800 million sent offshore … this is not a Whyalla problem - it is a GFG problem," he said.
Opposition Leader Vincent Tarzia said the government was in chaos and Mr Malinauskas was scrambling because he had allowed the situation to spiral.
"Peter Malinauskas has just fired a cannonball through the heart of the South Australian economy and left a mess for future generations to clean up," he said.
A report from the McKell Institute's SA branch released on Wednesday said Australia would become "dangerously dependent" on Chinese steel imports if the steelworks were to fail.
"That would leave us completely exposed to coercion from strategic adversaries," chief executive Ed Cavanough said.
"The Whyalla Steelworks (are) the only manufacturer of 'long steel' products which are core inputs into Australia's transport, construction and manufacturing industries."
