Papua New Guinea and Australia have signed a memorandum of understanding regarding their joint plans to develop a naval base on PNG's Manus Island.
The Lombrum Joint Initiative was signed in Canberra by Australian and Papua New Guinea defence officials, and the heads of their respective defence forces.
It formalises the joint announcement by the two countries prime ministers Peter O'Neill and Scott Morrison in November last year.
At the APEC Leaders summit in PNG last November, the US also indicated it would join the initiative.
However, after the signing, PNG's Defence Secretary Trevor Meauri said the MoU would help guide the collaboration between the PNG and Australia to redevelop facilities at Manus' Lombrum naval base.
He said the initiative would increase interoperability between the two defence forces and provide greater opportunities for training and joint activities.
Mr Meauri said it would also enhance PNG Defence Force capability to protect PNG's borders and maritime resources through a broad program of mentoring, tailored training, and infrastructure development.
"We recently acquired the Pacific Guardian class patrol boats for our navy," Mr Meauri said.
"We have to upgrade our facilities to accommodate these bigger modern boats. That is what we will do under this MoU in Lombrum."
According to him, the initiative representated a "step up" from the existing Defence Cooperation Program between the two countries.
Furthermore, Mr Meauri and Defence Minister Solan Mirisim last month met with Manus Governor Charlie Benjamin and Manus' other MP, the Parliament Speaker Job Pomat, to clarify the meaning of the Initiative.
The secretary said he was available to discuss the initiative with other community leaders from Manus.