PM Julia Gillard and Barack Obama have announced the deployment of 2,500 marines to the Northern Territory, with the US President saying the Asia-Pacific region is of 'huge importance'.
The first deployment of around 250 US Marines will be sent to the city of Darwin in Australia's Northern Territory in mid-2012, kicking off a rotating six-month presence of as many as 2,500 US troops Down Under.
"We have agreed joint initiatives to enhance our alliance, 60-years-old and being kept robust for tomorrow," Gillard told a joint news conference in Canberra.
"It is a new agreement to expand the existing collaboration between the Australian Defence Force and the US Marine Corps and the US Air Force.
"Over a number of years we intend to build on this in a staged way," she said of the deployment.
Beijing reacted angrily, saying the US military deployment to Australia "may not be quite appropriate".
"It may not be quite appropriate to intensify and expand military alliances and may not be in the interest of countries within this region," foreign ministry spokesman Liu Weimin told reporters in response to a question on the deployment.
The troops, whose nations are also allied in Afghanistan, will conduct exercises and training on a rotational basis on Australian bases with the Australian Defence Force.
The leaders also agreed to enhance cooperation between their air forces that will result in increased rotations of US aircraft through northern Australia, which is closer to Asia than it is to Sydney and Melbourne.
Obama said the announcement of the joint task force and his trip to the booming Asia-Pacific, which began Wednesday with his arrival in Canberra, sent a clear signal to America's allies in the region.
"We are two Pacific nations and with my visit to the region I am making it clear that the United States is stepping up its commitment to the entire Asia-Pacific," he said.
"This deepening of our alliance sends a clear message of our commitment to this region, a commitment that is enduring and unwavering," he added ahead of the East Asia Summit in Bali later this week.
Obama added that he was in the Pacific because it was the fasting growing economic region in the world.
"The second message I am trying to send is that we are here to stay," he said.
"This is a region of huge strategic importance to us. Even as we make a whole host of important fiscal decisions back home, this is right up there at the top of my priority list.
"And we're going to make sure that we are able to fulfil our leadership role in the Pacific region."
Washington appears to be sending a signal to China and its expanding military with its deployment in Australia, but also wants to extend its capability to deploy for disaster relief missions in Southeast Asia.
But Obama insisted that the boosted military alliance should not be seen a threat to China, although he warned Beijing it should "play by the rules".
"The main message that I've said not only publicly but also privately to the Chinese is that with their rise comes increased responsibility."
Watch US President Barack Obama's speech to the Australian Parliament live tomorrow at 10.10am AEDT on SBS One and online.