Defence Minister Peter Dutton said the new defence arm would be modest to start with, though he gave no detailed staffing or budget figures.

In a speech to the Australian Air Force, he said space "will undoubtedly become a domain that takes on greater military significance in this century".

"Space is becoming more congested and is already contested, particularly as the boundaries between competition and conflict become increasingly blurred through grey-zone activities," the minister said.

Dutton positioned Space Command as a clear counter to China and Russia's extraterrestrial military ambitions, namechecking both nations in his speech along with all "countries that see space as a territory for their taking, rather than one to be shared".

Space Command will be led by Air Vice-Marshal Cath Roberts -- "a self-professed science fiction buff" -- who will oversee a team drawn from across Australia's Army, Navy and Air Force, as well as private contractors.

Dutton said the agency will "initially be modest" but added that Australia will need "a Space Force in the future" -- a nod to the US service that was launched by President Donald Trump in 2019.

Space Command makes way for close collaboration between the United States and Australia in yet another theatre, coming just months after the two countries signed a new military partnership, AUKUS, along with the United Kingdom.

Australia's conservative government has been squarely focused on the military as an election looms, committing earlier this month to increase the country's defence force to 80,000 troops by 2040.