Australia's Collins Class submarines will be fitted out with half a billion dollars worth of new high-tech sonar technology.
The upgrades will allow the submarines to better detect and locate other vessels while avoiding detection themselves, Defence Minister Marise Payne says.
"Enhancing the Collins Class' high-end warfighting capabilities so they can continue to detect and locate other vessels, ensures it will be an effective deterrent to potential adversaries," Senator Payne said.
The project will cost $542 million and create around 100 direction jobs across the country.
Around 70 per cent of the technology will also be Australian made.
"It's yet another sign of the strength of Australia's defence industry that the vast majority of this complex project will be done locally, creating jobs while delivering the capability our Navy needs," Defence Industry Minister Christopher Pyne said.
ASC, the government-owned Adelaide company which built and now maintains the fleet, said any enhancement to the submarines capacity was welcomed as the fleet will need to stay in service until the early 2030s.
"This sonar upgrade project is incredibly important in maintaining that capability into the future," CEO Stuart Whiley said.
The Navy's six Collins will be withdrawn by 2036 making way for a new fleet of French-designed submarines.