Singapore will invest up to US$1.67 billion in Australia's defence infrastructure and hike troop numbers it sends for training, Prime Minister Malcolm Turnbull said Friday.
The new agreement also includes commitments to open markets and trade and increase collaboration in science and research, he said, adding it would create thousands of jobs in northern Australia.
"We will jointly develop military training facilities in northern Queensland which will be fully funded by Singapore," the prime minister told reporters.
"Singapore will invest up to two-and-a-quarter billion dollars (US$1.67 billion) in the expansion of two of our most important military training facilities," he said, naming Shoalwater Bay and Townsville.
Turnbull said upgrading the Free Trade Agreement between the countries would make it much easier for Australians to live and work in Singapore.
"This is a great day for the Australian Singapore relationship," he said, dismissing concerns that deeper ties between Canberra and Singapore could rankle China.
Some 6,600 Singaporean troops already train each year in northern Australia. Under the new deal this will climb to 14,000, staying for 18 weeks instead of the current six, trade envoy Andrew Robb said.
Singapore Prime Minister Lee Hsien Loong said the Comprehensive Strategic Partnership (CSP) signed with Canberra last year was "an ambitious package covering many aspects of our relationship".
"Our two countries are politically like-minded, strategically aligned and economically complementary. We have much to gain by working closely together," he said in a statement.
Singapore is Australia's fifth-largest trading partner, with gold and crude petroleum key exports.
As it looks to Asian markets for growth, Australia will encourage greater collaboration in research with Singapore and locate one of its five start-up "landing pads" in the city state to promote innovation and entrepreneurship.