The prototype - a pulsed, quantum laser-based, cavity ring-down spectrometer - is being tested at the US government's Los Alamos National Laboratory in New Mexico.
The laser machine developed by the University of New South Wales (UNSW) is "about 100 times more sensitive and 100 times faster than any other detection device", Associate Professor Charles Harb said.
"We can measure the components of TNT very clearly, down to the tiny sub-millitorr pressures, in other words in the parts per billion range in atmosphere," Harb said.
The laser device could sniff bags travelling along a conveyor belt and instantly alert security personnel if it detects explosive vapours from a passing object, such as a suitcase.
It could replace intrusive airport security checks such as pat downs and full body scans and bomb sniffer dogs, UNSW said in a statement.
According to Harb, the device uses mirrors to repeatedly pass through the vapour in a "figure-of-eight" path, which provides a more accurate measurement.
Harb expected that it would take two years of testing and calibrating the prototype