The defence force's ability to operate out of northern Australia will be boosted with improvements to air force bases and barracks.
The government is putting aside $3.8 billion for upgrades across Queensland, the Northern Territory and Western Australia.
RAAF Learmonth on the WA coast, Scherger and Townsville in Queensland and other bases across the NT and Cocos Islands will share $2 billion to improve runways, fuel storage and supply, accommodation and security.
A further $1 billion will go towards upgrading training areas in the NT, as well as barracks in Darwin and Townsville.
Maritime bases in Coonawarra, NT and Cairns in Queensland will be given a share of $600 million while another $200 million will be used to accelerate additional projects across Australia's north.
The money is coming from a combination of reallocated defence budget spending and the cancellation of other programs.
The announcement comes days after a major review recommended the defence force improve its ability to operate out of northern Australia.
Defence Minister Richard Marles said northern bases were critical to Australia's ability to project power.
"Working on our northern bases is a fundamental priority right now, which we are getting on with," he said.
"The northern bases are fundamentally important and are a huge opportunity for our country."
The review also recommended Australia focus more on long-range strike power, such as guided missiles.
The government subsequently announced it would cut a slated infantry vehicle program (LAND 400 Phase 3) from 450 to 129 and cancel 30 new howitzer artillery systems (Land 8116).
It will instead focus on missiles, artillery and landing craft to transport Australian power.
South Korean defence company Hanwha is working with the government on both contracts and said it was disappointed at the cancellation of the howitzers and cuts to the infantry fighting vehicles.
"We are awaiting further guidance from the Commonwealth on the path ahead for this project," a company representative said.
"Hanwha Defence Australia will continue working with our partners on both projects."
Hanwha said there was no change to the initial contract for 30 self-propelled howitzers, only the second phase.
"While we are disappointed in the cancellation of the second phase of Land 8116, and the cut in numbers for LAND 400 Phase 3, we are pleased LAND 400 Phase 3 is continuing, and it remains a priority project for army," it said.