Papua New Guinea has made a surprise request to Australian ministers for direct budget support, amid the government's economic woes.
Papua New Guinea is seeking direct budget support from Australia to pay for schools and hospitals.
PNG is already Australia's highest aid recipient with a program worth half a billion dollars.
Decades ago Australia directly funded PNG budgets, but the practice was halted because of corruption problems.
The PNG economy has faced severe challenges as a result of the downturn in global commodity prices.
The government's budget is under heavy strain and it has been forced to cut spending and raise taxes.
Foreign Minister Julie Bishop and four Australian ministers were in PNG for annual talks with their counterparts on Wednesday.
The request for budgetary support reportedly came as a surprise to the Australian delegation.
"The approach for budgetary support will be on specific nominated sectors to achieve maximum impact," PNG Foreign Minister Rimbink Pato told The National newspaper.
The PNG government is concerned about the effectiveness of the Australian aid program and money chewed up by contractors and consultants.
Ms Bishop said Australia would consider the request.
"We want to ensure that it's transparent, that it's value for money and it provides the kind of outcomes that will see economic development and prosperity here in PNG," she told the ABC.
A Senate inquiry last year called for an overhaul of Australia's aid program to PNG because of concerns the money is not spent well or getting through to the poorest people.
The closure of the Manus Island immigration detention centre was also discussed during ministerial talks as well as Port Moresby hosting the APEC leaders summit in 2018.
Australia is expected to contribute a large portion of the costs.
Australia recently announced $48 million in funding to extend the presence of 73 federal police officers in PNG until after the November summit.
Officers are helping PNG police to plan security arrangements.
Ms Bishop opened Australia's new consulate-general in Lae, PNG's second largest city.