Australia will create a multi-billion dollar fund for Pacific island nations to build infrastructure, in a move seen as a bid to counter China's influence.
Delivering a major policy speech, PM Scott Morrison said he aimed to restore the Pacific to the "front and centre" of Australia's foreign outlook.
Australia will offer up to A$2bn (£1.11bn; $1.45bn) in grants and loans to strengthen ties, he said.
Analysts say it is a response to China's growing presence in the region.
Mr Morrison said on Thursday: "Australia cannot take its influence in the south-west Pacific for granted. I think, sadly, too often we have.
"This is our patch. This is where we have special responsibilities."
The fund could be used for telecommunications, energy and transport infrastructure projects, Mr Morrison suggested.
He added Australia would expand its diplomatic posts and military ties, and broadcast more local TV programmes in the region.
Mr Morrison said new diplomatic missions would be created in Palau, the Marshall Islands, French Polynesia, Niue and the Cook Islands.
China is estimated to have invested A$1.3bn in the region since 2011, and has become the second-largest donor of foreign aid there behind Australia.
Australia has already moved to play a key role in significant Pacific projects this year.
In July, it committed to building an underwater internet cable to the Solomon Islands and PNG, in a move that shut out Chinese company Huawei.
It has also announced plans to build a joint naval base with PNG.