In a move that signals a more adversarial stance on China and less reliance on the United States, Prime Minister Scott Morrison will say Australia's new goals are to shape the strategic environment, to deter actions against Australia's interests and to respond with "credible military force, when required".

Australia must prepare for "a post-COVID world that is poorer, more dangerous and more disorderly," the Prime Minister will say.

The Indo-Pacific is "the epicentre of rising strategic competition," Mr Morrison will say in an address to launch an update on Australia' defence strategy that marks a significant departure from the previous posture.

Billions of dollars are set to be spent on weapons and infrastructure that would allow Australian forces to strike targets at a distance of more than 370 kilometres away, the development of hypersonic weapons and $7 billion on increasing capability in space.

The longer-range strike missiles will give Australia the ability to defend forces and infrastructure at risk from a greater distance.

"Our region will not only shape our future - increasingly it is the focus of the dominant global contest of our age," the Prime Minister will tell cadets at the Australian Defence Force Academy in Canberra.

"Tensions over territorial claims are rising across the Indo-Pacific region - as we have seen recently on the disputed border between India and China, in the South China Sea, and in the East China Sea.

"The risk of miscalculation - and even conflict - is heightening."

Increasing government spending on defence to 2 per cent of gross domestic product was already government policy, but the boosted funding will add an extra $14.8 billion in acquiring new capability, and an extra $11.2 billion in sustainment.

Funding will be $270 billion over the next ten years, up from the $195 million promised for the decade following the 2016 Defence White Paper.

Australia can no longer assume that it will have the upper hand or the technical edge, Mr Morrison will say, warning that coercive activities are "rife" and foreign interference has been made easier by new technologies.

Acknowledging the fractious relationship between the United States and China, Mr Morrison said there is a "new dynamic of strategic competition" in which Australia and countries like Japan, India and Korea all have a role to play.

"The largely benign security environment Australia has enjoyed - roughly from the fall of the Berlin Wall to the Global Financial Crisis - is gone."

The Prime Minister will re-commit to military partnerships with the United States, but said taking part in US-led coalitions outside of Australia's immediate region won't happen if it dilutes the ability to respond to local issues.

"The security assurances, intelligence sharing, and technological and industrial cooperation we enjoy with the US are, and will remain, critical to our national security," he will say.

"But if we are to be a better and more effective ally, we must be prepared to invest in our own security."

The new strategy will focus on the region surrounding Australia, and will require changes to the structure of the defence force and capabilities.

The number of defence force personnel is expected to increase by 800, 650 of which will go into the navy, 50 into the army and 100 into the air force.

Of the spending, $75 billion is set to go to maritime capability, $15 billion on information and cyber capability, and $65 billion on air capability. As well as the $7 billion on space capability, $55 billion will be spent on land forces.

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The speech comes at a time when relations between Australia and China have soured significantly, after the latter reacted badly to Australia's push for an independent inquiry into the origins of the coronavirus and increasing concerns about China's cyber interference.

Just this week China accused Australia of espionage on its shores through state-sponsored media.