A cabinet minister described the move as "stupid", while Adam Giles, Chief Minister of the Northern Territory and usually on Mr Abbott's political wavelength, lamented: "It's Australia Day, we're not a bunch of tossers."
"We thought it was a hoax," federal opposition leader Bill Shorten said, echoing the thoughts of many.
Mr Shorten said the knighthood should not be a distraction from the debate over whether Australia should become a republic - a debate he said was appropriate for Australia Day.
Mr Abbott didn't buy into the republic debate and defended his honour for Prince Philip, dismissing ridicule of the move on social media as "electronic graffiti".
"In the media, you make a big mistake to pay too much attention to social media," Mr Abbott said.
He said Prince Philip was "eminently suitable" for the honour because of his "very long life of duty and service".
The monarchy has played an important part in Australia's life since 1788, he said.
"Prince Philip has been a great servant of Australia, he's been a great servant of all the countries of the Commonwealth.
"He's the patron of hundreds of organisations. He's the inspiration and wellspring of the Duke of Edinburgh's Awards."
The Australian Republican Movement criticised Mr Abbott's resurrection of the titles knight and dame as "anachronistic and demeaning".
Chairman Geoff Gallop said Australia's honours system "should be honouring great Australians on merit, not birthright".
Knighthood adds to political pressure
The decision was all the more extraordinary given that, barely a year after he swept the Labor Party out of office, Mr Abbott is already so unpopular that there is talk of him being ousted by his own conservative Liberal-National Party coalition.
With federal politicians preparing to return to Canberra next month after the long summer break, Mr Abbott had been expected to put the annus horribilis of 2014 behind him and squash the leadership speculation by starting 2015 in decisive fashion.
Instead, "Libs must wonder who can help a PM apparently determined to be seen as a joke", tweeted respected political journalist Laurie Oakes.
Conservative commentators were aghast.
"Is there no one in the [Mr Abbott's] office capable of uttering the simple phrase 'This is a dumb idea that is all pain and no gain'?" asked Chris Kenny, a columnist.
Although Australians, like many Commonwealth subjects, are enamoured with the younger royals, the Queen's husband of 62 years is less well regarded.
Yesterday there were fond recollections of the Duke's many gaffes, particularly an incident in 2002 when he asked an Aboriginal leader and businessman, William Brim: "Do you still throw spears at each other?"
There was a similar reaction when Prince Philip was awarded New Zealand's top honour in 2012.
The Duke of Edinburgh was made an Additional Member of the Order of New Zealand in the Queen's Birthday Honours.
The Republican Movement of Aotearoa said the award was outrageous and likely to strengthen its own cause.
Read about more of Prince Philip's gaffes here.
- Independent, AAP, nzherald.co.nz
