Prime Minister Anthony Albanese announced the investment during his visit to the United States.

A leading Australian cyber security officer said Microsoft's investment and expansion into Australia's computing capacity would create high-value jobs in Canberra and protect the nation from the increasing threat of cyber attacks.

Chief strategy officer of CyberCx, Alastair MacGibbon, said the private investment by Microsoft would have significant benefits for Australian cyber security.

"I think it's a recognition that the private sector has much more to say and do around cyber security than perhaps a 1980s sort of view of the world that the government should be doing everything on its own," he said.

The Australian Signals Directorate will join Microsoft to build a "cyber shield" to protect networks from security threats as part of a $5 billion investment in local projects by the tech giant.

The Microsoft investment comes at a time of increasing collaboration between Australia and the US on security, driven in part by concern about relying too heavily on technology from China.

Mr MacGibbon said the key component of announcement will be the agreement between Microsoft and the Australian Signals Directorate to toughen protection against online threats.

"They will co-operate with the Signals Directorate, which by its nature is predominantly in Canberra, so there is a very strong Canberra nexus," he said.

"Microsoft has huge ability of seeing what's happening across the world, if they were to share indicators of compromise around the way in which hackers work, we can help protect not just the Australian government but the broader Australian community.

Microsoft's national data centre footprint will grow from 20 sites to a total of 29 spread across Canberra, Melbourne and Sydney to soak up the information load to come from the expansion of cloud and AI technology.

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It is also pledging to train 300,000 Australians for jobs in cloud computing - based on the processing and storage of information at remote data centres - and artificial intelligence.

The Microsoft-Australian Signals Directorate Cyber Shield, or MACS, will involve sharing intelligence and developing new tools, with a focus on detecting, analysing and defending against sophisticated nation-state cyber threats such as China and Russia.

Mr Albanese told reporters in Washington that the partnership will improve joint capability to identify, prevent and respond to cyber threats.

"We need to get this right ... with data being collected on every aspect of our life, not just credit cards but other details, health data, everything else, all the aspects of the way that we live, work and play being collected," he said.

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