Malaysia will be given two retired Customs boats to help it tackle people smuggling in the region.
Immigration Minister Scott Morrison announced the two Bay Class vessels will be handed over in mid-2015, saying it was a "practical operational strategy to stem this criminal trade".
Mr Morrison said the boats have a range of 1000 nautical miles and Australia would provide training to Malaysian authorities.
Malaysia was a key partner in regional and bilateral efforts against people smuggling, he said.
"These vessels will offer enhanced search and rescue and interception capacity to the Malaysian Maritime Enforcement Agency's border protection operations," Mr Morrison said in a statement on Thursday.
"This will improve Malaysia's capability to preserve life at sea, while shutting down people-smuggling syndicates."
