Researchers from the University of Wollongong are working to replace latex with the bio-material, which is similar to the kind used in contact lenses.
The self-lubricated substance possesses a "stiffness similar to body tissues," allowing it to potentially confer greater sensitivity.
Hydrogels can also be made transparent, invisible and biodegradable to enable environmentally friendly disposal, 'The Verge' reported.
The research team plans to identify potential hydrogels and a suitable "material composition" before examining their breaking strength, toughness, feel, permeability, and other properties.
The researchers hope to eventually have people moving from "having to" to "wanting to" use this contraceptive method.
"It's really about us challenging our own perceptions, particularly when developing new technologies to be deployed in places like sub-Saharan Africa and Southeast Asia," said Dr Robert Gorkin who led the research team.
Hydrogels consist of pretty much nothing but water held together by a very small amount of long molecular chains called polymers.
Hydrogels are soft and wet materials with properties similar to those of body tissues.
The University's efforts are funded by the Bill & Melinda Gates Foundation, which is offering grants to those aiming to create the "next generation condoms."