The alarming findings released by the Australian National University showed 77 per cent of Australians were satisfied or very satisfied with democracy, compared to 81 per cent in 2008.
The biggest change recorded was fewer Australians being very satisfied with the political system (14.2 per cent) than 15 years ago (23.4 per cent).
And fewer Australians were content with democracy compared to their neighbours across the Indo-Pacific.
Australia lagged in fourth position behind Vietnam, Cambodia, and Taiwan in being happy with the system of governance.
The study found confidence in government had continued to decline among Australians since the height of the COVID-19 pandemic.
Study co-author Professor Nicholas Biddle warned the nation against becoming complacent.
Education is a predictor of a person's satisfaction with the political system, a study has found.
"What this shows is that while Australians' overall satisfaction with democracy has dropped, our democracy remains strong and well supported," he said.
"However, what this data shows is that we should not take this for granted."
A greater number of people who were born overseas were happier with democracy than their Australian-born counterparts.
Education was found to be the clearest predictor of a person's satisfaction with the political system.
People who had not completed year 12 had the lowest score of being satisfied with a majority-rules process at 67.5 per cent.
Australians with university degrees were much happier with democracy, with four in five people who had attained an undergraduate degree reporting satisfaction.
This dropped slightly to 82.3 per cent for those with a postgraduate degree.
Prof Biddle said Australians who had not completed high school or attained a post-school qualification considered themselves as having low status in society.
He said this contributed to the divide in satisfaction between those with high and low levels of education.
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