There are 10 steps in the citizenship application process. In a nutshell they are:-
Step 1: Ensure that you meet the eligibility criteria
You are aged between 18 -60
You are a permanent resident
You satisfy the residence requirement (See FAQ above and the Citizenship Wizard here)
You are of good character
You intend to reside in Australia or maintain a close association with Australia.
Step 2: Check that you meet the residence requirement.
Step 3: Prepare for the citizenship test.
Step 4: Gather your relevant original documents and have copies of them certified.
Step 5: Complete your application form.
Step 6 : Lodge your application, certified copies of your relevant documents and the correct fee
Step 7 : Attend your citizenship appointment – ensure you bring all your original documents
Step 8: Sit the citizenship test at your appointment
Step 9: Await notification of the department’s decision
Step 10: Attend a citizenship ceremony and make the pledge.
You will find the form which also contains more detailed information about the process here.