Australia plans to train 20,000 teachers in Myanmar (Burma) over the next four years.
The announcement was made by Foreign Minister Bob Carr at the end of a three-day visit. Economic sanctions are to be lifted and Australia will double its aid by 2015.
The ABC reports education is a key target, with aid in that sector to total $A80 million over the next four years.
The money will go towards teacher training, food aid for school children, programmes to increase school attendance, textbooks and school facilities.
The number of tertiary scholarships offered to Myanmar students to study in Australia will also be increased.
The ABC reports that less than half of the country's 18 million children complete five years of primary school and only about half of all teachers are qualified.