The Regional Assistance Mission to Solomon Islands, or RAMSI, is to build 200 houses for the Royal Solomon Islands Police Force over the next four years with funding from Canberra.
The Commander of RAMSI's Participating Police Force, Denis McDermott, says 16 million US dollars has been allocated for the houses.
Educational and training opportunities for police have also received a major boost in the Australian aid budget, with money set aside to improve numeracy and literacy levels, and other targeted training programmes.
Mr McDermott says he is particularly pleased a solution had been found to the police housing problems.
He says the state and standard of police housing in Solomon Islands has been a major barrier to further improvement in the development of the force.
The Australian assistance with housing follows a commitment last year by New Zealand to build 34 new houses for police families to replace the current police barracks at Rove and at other priority locations around the country.