But Prime Minister Anthony Albanese would not confirm reports his government would spend up to $1 billion on sea mines, high-tech underwater weapons.
The defence department told the Sydney Morning Herald that Australia was acquiring sea mines as "a significant deterrent to potential aggressors".
Sources also told the masthead the government had signed a contract worth between $500 million and $1 billion for a large number of sea mines provided by a European supplier.
But Mr Albanese said he would not pre-empt advice expected from a strategic review being conducted by former defence minister Stephen Smith and former defence force chief Angus Houston.
Defence Minister Richard Marles is expected to receive a report on the review in February.
"What that (report) is aimed at doing is making sure that every single dollar that's spent in defence is spent in the best possible way to support our national security," he told ABC News on Monday.
The prime minister said the report, expected to be handed to the government soon, would also look at how Australia could shift defence strategies from traditional land-based conflict to modern warfare.
"We are looking at missile defence ... at cybersecurity, we're looking at all of these issues," he said.
"We need to make sure we have the best possible defences."
The federal budget, due in May, is expected to include funding for the recommendations made by the strategic review.
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