The fresh defence agreement will be signed by Prime Ministers Anthony Albanese and James Marape on Wednesday in Port Moresby, part of celebrations to mark 50 years of Papua New Guinea's independence from Australia.

Australian Defence Minister Richard Marles described the deal as "historic".

He said Australia's military had been open to foreign nationals from New Zealand, Canada, the United Kingdom and the United States since last year.

"At the time we said we would have an eye to the Pacific," he told national broadcaster ABC.

"The agreement that we will sign with PNG contemplates this," he said.

"There's more work to be done in terms of walking down that path, but we certainly are interested in how we can recruit Papua New Guineans directly into the ADF," Marles added, referring to Australia's military.

The agreement follows an overarching security agreement signed between the two countries in 2023.

Australian media said the deal would enable Papua New Guinea nationals to serve in the Australian Defence Force with the same pay as other members and start a pathway to citizenship.

Speaking in Port Moresby on Monday, Albanese said the deal was an "upgrade in the relationship and its increased interoperability, its increased engagement and security relationship", according to ABC.

Asked about concerns the deal could violate Papua New Guinea's sovereignty, he said "people will get to see the agreement, what Australia does is deal with countries with respect and respect for sovereignty is front and centre of that".

Papua New Guinea's Defence Minister Billy Joseph said the deal "promotes regional security".

"A secure Papua New Guinea is a secure Australia, and a secure Australia is a secure Papua New Guinea," he said.

Less than 200 kilometres (124 miles) from Australia's northernmost border, Papua New Guinea is the largest and most populous state in Melanesia.

China has committed billions of dollars to Pacific nations over the past decade, funding hospitals, sports stadiums, roads and other public works.

It is an approach that appears to be paying dividends.

Solomon Islands, Kiribati and Nauru have all severed diplomatic ties with Taiwan in favour of China in recent years.

Canberra has stepped up its engagement with the region in a bid to counter Beijing's influence.

Albanese was in Vanuatu last week to discuss a deal aimed at deepening Australia's links to the Pacific nation.

However, the deal was not signed, with Prime Minister Jotham Napat citing concerns that its wording would limit Vanuatu's ability to access funds for "critical infrastructure" from other nations.