Australian heatwaves have a significant impact on society. Most previous studies focus on understanding them in terms of frequency, duration, intensity, and timing. However, understanding the spatial characteristics of heatwaves, particularly those occurring in contiguous regions at the same time (here referred to as contiguous heatwaves), is still largely unexplored. Here, we analyse changes in spatial characteristics of contiguous heatwaves in Australia during 1958-2020 using observational data. Our results show that extremely large contiguous heatwaves are covering significantly larger areas and getting significantly longer during the recent period (1989/90-2019/20) compared to the historical period (1958/59-1988/89). We also investigated the association of contiguous heatwaves in Australia with interactions of the El Niño–Southern Oscillation (ENSO) and Indian Ocean Dipole (IOD) using a large multi-member ensemble of a physical climate model. We found that areal magnitude, total area, median duration, and maximum area of large and extremely large contiguous heatwaves in Australia are significantly higher (lower) during the strong El Niño (Es), strong El Niño co-occurring with strong IOD positive (Es-IPs), and with moderate IOD positive (Es-IPm) (co-occurring strong La Niña with the strong IOD negative (Ls-INs)) seasons relative to the neutral seasons (where both ENSO and IOD are in neutral phase). During the Es, Es-IPm, and Es-IPs seasons, the large-scale physical mechanisms are characterised by anticyclonic highs over the southeast and cyclonic lows over the northwest of Australia, favouring the occurrence and intensification of heatwaves in Australia. These results provide insights into the driving mechanisms of contiguous heatwaves in Australia.