Solomon Islands is to receive about 37 million US dollars in aid from Papua New Guinea over the next five years.
A government statement says much of this money will be used on rural economic development, particularly in establishing the government's Economic Growth Centres.
The Solomon Islands Broadcasting Corporation reports the funding support was agreed to in bilateral talks between the Prime Minister Danny Philip and his PNG host, the Prime Minister Peter O'Neill, in Port Moresby this week.
The statement says arrangements already in place, such as the PNG scholarship scheme for Solomon Islands' students to study in PNG's tertiary institutions, will continue.
The prime ministers have also pledged to work together in encouraging economic development, saying it is important to focus on economic growth in Melanesia.