Left wing Labor delegates and some unions are pushing to strip mention of the Australia-UK-US agreement from the party's policy platform in defiance of the government's position.
Anti-war and anti-nuclear protesters gathered at the entrance of the ALP national conference in Brisbane on Friday, carrying placards denouncing AUKUS.
The demonstrators opposed war-mongering, the nuclear element and costs associated with the acquisition of submarines via the pact and promised to remain "raucous".
Mr Albanese said the government was "not doing deals".
"What we're doing is putting forward the arguments of why Australia needs to participate in AUKUS," he told Sky News.
"I put it very simply: Does Australia as an island continent need submarines? If the answer to that is yes, then what is the form of submarine that is the most effective?
"I've been convinced - and we've convinced, I'm confident, the majority of delegates - that nuclear-powered, conventionally-armed submarines are the most effective."
Opposition foreign affairs spokesman Simon Birmingham took aim at the internal division, saying the government was trying to appease factional bosses.
"There are real concerns about the way in which this government is going to be able to manage this critically important, highly complex program for the future," he said.
"The divisions are plain and obvious.
"I hope for the sake of Australia's national interest that there are no further compromises."
The government says it remains fully committed to AUKUS.
Defence Minister Richard Marles, who is attempting to counter dissent within the party, will introduce a 32-paragraph statement at the national conference outlining how the pact fits with Labor's values and will protect Australian interests.
The document includes assurances about local jobs and manufacturing.
"Labor will uphold its proud history of championing practical disarmament efforts, its commitment to high non-proliferation standards and its enduring dedication to a world without nuclear weapons," it reads.
Foreign Minister Penny Wong told delegates Labor would continue its commitment to non-proliferation and disarmament and reprise "the great Labor tradition of taking the world as it is but shaping it for the better".
Labor Against War national convenor Marcus Strom says AUKUS goes against Labor's traditional anti-nuclear stance.
The government is adamant the submarines are in line with non-proliferation restrictions and will not lead to a civil nuclear industry or weapons.
Mr Albanese said there would be no imminent announcement about the treatment of nuclear waste from future submarines.
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