Vanuatu prime minister Charlot Salwai has arrived in Canberra for a short visit amid concerns about the influence of China in the South Pacific.
Mr Salwai will meet Prime Minister Malcolm Turnbull and Opposition Leader Bill Shorten.
"Vanuatu is one of Australia's key partners in the Pacific," Mr Turnbull said in a statement on Monday.
"I look forward to continuing our work together to foster stability and prosperity through the implementation of Australia's stepped-up engagement in the region."
Beijing's funding of a port in Vanuatu has raised eyebrows in Canberra.
Climate change is also a concern, as Pacific island nations grapple with rising sea levels and the increased frequency and intensity of cyclones and storms.
Australia and Vanuatu will work towards a bilateral treaty to deal with shared security concerns, from disaster response to maritime surveillance.
Mr Turnbull said Australia would also support Vanuatu's development of a national security strategy, and help recruit and train its modest police force.
Nearly half-a-million dollars has been pledged to enhance Vanuatu's cyber security and up to $19.5 million towards Vanuatu's education sector.
Mr Turnbull also stated the two countries would seek further cooperation to improve labour mobility.
"This will increase employment opportunities for Vanuatu's workers in Australia and help fill critical labour gaps in Australia's rural and regional areas," he said.
