More than 17,000 troops from the two allied nations will participate in Talisman Sabre, which is held every two years in Australia, from July 14 to 31.

Defence Minister Peter Dutton said a Chinese naval intelligence ship was approaching Australia's populated east coast, saying it was a "reminder of the ever-present PLA (People's Liberation Army)" in the region.

Beijing sent similar vessels to monitor Talisman Sabre in 2019 and 2017, local media reported.

"We've seen in previous operations the Chinese have a presence and we have been monitoring that for some time," Dutton told reporters.

"We obviously expect they operate according to international law, and we would expect nothing less if we were traversing through international waters close to China as well."

Australia's Defence Force said the exercises, which will largely be held on military bases in Queensland state and offshore, were designed to improve interoperability between the allies.

Britain, Canada, Japan, South Korea and New Zealand will also take part in the exercises while France, Germany, India and Indonesia are sending observers.