Australia will produce its own guided missiles under a $1 billion plan to fast-track a new weapons facility in partnership with a global arms manufacturer.
The federal government expects to spend $100 billion on missiles and other guided weapons over the next two decades, in response to a worsening strategic environment.
Prime Minister Scott Morrison said creating sovereign capability was essential.
"As the COVID-19 pandemic has shown, having the ability for self-reliance, be it vaccine development or the defence of Australia, is vital to meeting our own requirements in a changing global environment," he said.
"It's an imperative we now proceed with the creation of a sovereign guided weapons capability as a priority, accelerating this process following the idea first being explored in the force structure plan."
The announcement mirrors a commitment made during the Eden-Monaro by-election last year.
Labor supports fast-tracking Australian-made missile guidance systems.
"Australia does need to be more resilient when it comes to our defence and this announcement is part of that," Opposition Leader Anthony Albanese said on Wednesday.
Companies such as Raytheon, Lockheed Martin, BAE Systems and Kongsberg are considered likely bidders for the work.
It would allow Australia to replace missiles shipped in from overseas.
The government expects the new facility could generate $40 billion in local production and export sales over the new 20 years.
Australian Associated Press