Prime Minister Anthony Albanese announced details of the deal on Tuesday alongside his counterparts US President Joe Biden and UK Prime Minister Rishi Sunak.
Under the $368 billion deal - part of the AUKUS security arrangement - Australia will command a fleet of eight nuclear-powered submarines within the next three decades.
But the Australian Conservation Foundation said the government had been silent about how the nuclear material powering the submarines would be eventually be disposed of.
The foundation's nuclear analyst Dave Sweeney said Australia did not have the experience and expertise required to manage high-level radioactive waste.
"AUKUS presents by far the biggest threat yet that Australia will become a dumping ground for the world's worst nuclear waste," he said.
Mr Sweeney said the defence proposal had been developed without public consultation or debate.
Defence Minister Richard Marles said the disposal of the reactor would require a purpose-built facility on remote and geologically stable defence land, but this would not be needed until the 2050s.
The submarine project is expected to create at least 20,000 jobs over the next 30 years.
NSW Premier Dominic Perrottet said he believed Port Kembla, south of Sydney, should be used as an east coast base for the submarines.
But the local chamber of commerce and labour council said Port Kembla deserved better than what the premier had offered.
"We've been working so hard through the years to diversify our port to give real job opportunities to our people and we're almost there, on the cusp of $40 billion of investment in renewables," South Coast Labour Council secretary Arthur Rorris said.
"Out of nowhere comes this idea that they plonk a nuclear parking lot - not a ship-building base - but a parking lot here and stick a massive nuclear target on our backs."
Port Kembla Chamber of Commerce president Greg Rodgers said the community wanted the renewable energy jobs it had been promised.
"We're looking for renewable jobs, neutral energy industries, green industries," he said.