At least 800 jobs will be created at a new centre in Adelaide to manage development of the navy's next generation of submarines.
The federal government on Thursday announced another delay in the delivery of the navy's three new Air Warfare Destroyers.
Federal Defence Minister Stephen Smith and Defence Materiel Minister Jason Clare also announced the future submarine project systems will be based in Adelaide.
The project will create at least 800 jobs and will expanded over coming years.
SA Premier Jay Weatherill told reporters the submarine announcement meant the delay in the $8 billion AWD delivery would not be negative for the state.
Instead, it would avoid a gap in work at Adelaide's Techport.
"Instead of that (work) falling off before we got to the future submarines project, we now see a steady flow of work," Mr Weatherill said.
Hundreds of high-level jobs would be created, bringing new skills and capabilities to South Australia, the premier said.
It was also a further step towards a final decision to assemble the 12 new submarines in South Australia, he said.
"Both of these announcements assist us in realising our ambition to transition the South Australian economy from an old manufacturing sector to an advanced manufacturing sector," Mr Weatherill said.
"The truth is we cannot continue to compete in a low cost, low value manufacturing sector against some other low cost jurisdictions around the world."We have to be a high value, high technology, high innovation manufacturing sector and the defence industry is a vital platform to allow us to realise those ambitions."