The Australian Government says it will be providing budget assistance for Vanuatu in its revamped aid strategy.
Late last year Australia had threatened to withdraw its aid because of what it saw as the then government's lack of commitment to good governance and law and order.
But the parliamentary under secretary of the Ministry of Foreign Affairs, Bruce Bilson, says a platform for cooperation was created when the new Vanuatu Government signed a statement of principles committing to good governance.
The aid is of up to 25 million US dollars annually and Mr Bilson says it will include help with capacity building for basic services such as health and education.
"Areas where there is considerable expenditure and activity - that those operations are managed as well as they can be, that they are using the resources that are available as efficiently as they can be and that the government is in a position to pursue its goals for the Vanuatu people and that's where additional governance assistance is being provided."