SYDNEY: Australia will spend Australian $1.3 billion (US $1bn) on next-generation armoured land vehicles for its army, Australian Prime Minister Malcolm Turnbull said Monday as he announced the latest update to modernise the nation's military.

Australian forces are part of the coalition fighting the self-styled Islamic State (IS) group in Iraq and Syria, but Turnbull denied that the procurement of 1,100 blast-resistant Hawkei's from Thales Australia suggested a greater global engagement.

"I am not signalling that," Turnbull told reporters at a joint press conference with Defence Minister Marise Payne at a test facility for the Hawkei vehicles north of Melbourne.

"However, the reality is that IEDs (Improvised Explosive Devices) for example are a feature of the modern battlefield and regardless of the context in which the Australian Defence Force (ADF) is operating that type of threat is almost certainly going to be there.These vehicles are able to operate in every terrain."

Australia last year beefed up its air power with the $12.4bn purchase of 58 more F-35 Joint Strike Fighters (JSF) to bring its total JSF force to 72 and this year said it would buy two long-distance C-17 Globemaster planes in an Aus$1bn procurement to boost military and disaster relief operations worldwide.

Canberra has not yet decided on its biggest ever defence procurement programme — an estimated Aus$50bn project to replace current diesel and electric-powered Collins Class submarines.

Turnbull said the government would purchase the 1,100 locally-built Hawkei protected vehicles, as well as more than 1,000 trailers, manufactured at Thales Australia's production line in Bendigo in the southern state of Victoria.

"It is an example of how the ADF is investing in technology to meet the threats of the modern battleground," he said.

Turnbull said the program will provide 170 jobs directly and a further 60 in the supply chain as the vehicles, which are designed to be more mobile and have greater blast resistance, are manufactured in Bendigo.

The Hawkei is also the only protected mobility vehicle in the ADF that can be transported by Australian military helicopters.

Turnbull said the vehicles will pioneer a next-generation communications management system to be developed in Australia by French giant Thales.

He said it was hoped the Hawkei would build on the success of the heavier, Thales Australia Bushmaster armoured infantry transport vehicles which have been used in Afghanistan and exported to several countries.

"This particular vehicle will be a world leader... and has enormous potential in an export market," Defence Minister Senator Payne said.

As Bushmaster production winds down in Bendigo, pilot vehicle production in the Hawkei is set for early 2016 with, full-rate production in 2018.