The biannual "Talisman Sabre" war games -- seen as a key symbol of the countries' alliance -- will take place in July, but will be roughly half the usual size, as the number of foreign troops entering Australia will be limited.

Vice Admiral David Johnston said about 17,000 personnel will take part in the exercise, with 2,000 foreign forces entering Australia and undergoing a 14-day quarantine.

"This year... there will be less foreign forces operating on Australian territory," he told a Senate hearing.

"But all of those who will come in onto Australian territory will have had to have gone through quarantine practices."

Australia has largely contained local transmission of the coronavirus and the number of overseas visitors allowed to enter the country has been tightly restricted in the last 18 months.

Both Australian and American military officials had been keen to see the exercise go ahead, not least as Australia comes under sustained diplomatic pressure from China.

Plans have been put in place to keep most of the foreign forces offshore for the duration of the exercise.

The exercise also includes personnel from Canada, Japan, South Korea, New Zealand and Britain.

In 2019, the exercise included 34,000 mostly Australian and American personnel.