Singapore is reportedly planning to invest A$2.25bn ($1.7bn) to expand its military bases in Australia, as China demonstrates its military strength in the South China Sea.
As part of the proposed expansion, Singapore will increase the number of troops it has on rotation in Australia from 6,000 to 14,000 over the next 25 years, ABC News reported.
Both countries are said to have also agreed to develop military training areas and facilities in Australia.
Military bases at Townsville and Shoalwater Bay will be upgraded, under the agreed terms of the deal.
S Rajaratnam School of International Studies security expert Richard Bitzinger was quoted by Reuters as saying: "The kind of military relationships that (Singapore) have and types of military ties that they are developing and deepening, they don't have with China.
"I am not saying that this is being done overtly to deal with China, but I wouldn't be surprised if that isn't a major driver behind this."
The deal will also improve visa conditions for Australian workers in Singapore, ABC reported.
Singapore Prime Minister Lee Hsien Loong was quoted by the Wall Street Journal as saying: "Our economies will become more integrated and intertwined. Defense cooperation will be stepped up.
"The Singapore Armed Forces will be able to do more military training in Australia."
Singapore has increased its spending on new warplanes, attack submarines, patrol ships and helicopters from $8bn in 2011 to $10.7bn within a period of five years, according to the Wall Street Journal.