Australian Prime Minister Scott Morrison is expected to announce a $US1.5 billion fund to provide loans to Pacific nations today, in a speech putting forward the Government's new foreign policy strategy in the Pacific.
Australian media reports Mr Morrison will today put forward the fund, which will invest in infrastructure like telecommunications, energy, transport and water.
A further $US700 million will go to state export financing agency Efic, to support Australian businesses operating in the Pacific.
Australia will also establish a Defence Force mobile training team for deployment to the Pacific to upskill local forces.
Mr Morrison will announce new diplomatic missions in Palau, the Marshall Islands, French Polynesia, Niue and the Cook Islands.
There will also be new military sporting engagements and a new sports programme, strengthening regional ties with Australia.
The govenrment will also work with commercial media to expand access to Australian TV content in the Pacific.
The move comes as Australia and China vie for influence in the Pacific.
China has spent over a billion dollars on concessional loans and gifts since 2011 to become the Pacific's second-largest donor after Australia, stoking concern in the West that nations could end up overburdened and in debt to Beijing.
Foreign policy analysts told Reuters the new infrastructure fund will test Australia's already cool relations with China, its largest trading partner.
Ties between the two countries have been strained since Australia accused China of meddling in its domestic affairs late last year.
Australia's Foreign Minister Marise Payne is scheduled to meet her Chinese counterpart in Beijing today, the first visit by a senior Canberra in two years after bilateral relations soured.
Australia has already this year pledged to develop several infrastructure projects in the Pacific but it has been forced to raid its aid budget to fund the projects.
In May, Australia said it would spend about $US145 million to develop an undersea internet cables to Papua New Guinea and Solomon Islands amid national security concerns about China's Huawei Technologies Co Ltd.
Earlier this month, Australia said it would help PNG develop a naval base, beating out China as a possible partner for the port development.