The government has made a six-fold increase in funding for a squadron of US-made Northrop Grumman Global Hawk unmanned aerial vehicles (UAVs) which would patrol Australia's borders, territorial waters and could be used further afield.

"The success of the aircraft such as Global Hawk in operations over both Iraq and Afghanistan have demonstrated the huge capacity boost these assets can bring," Defence Minister Robert Hill said in unveiling the government's 50 billion (38 billion US) dollar Defence Capability Plan for the next 10 years.

"You can put an unmanned vehicle up that can travel for up to 24 hours over a huge distance, you can basically have a continual surveillance capability with a squadron."

Hill said the aircraft would provide the airforce and "battlespace" commanders with near real-time, high resolution intelligence, surveillance and reconnaissance imagery.

The minister said the defence plan, the culmination of a 12-month review of the army, navy and airforce, would also see ageing tanks, warships and fighters replaced by state-of-the-art hardware.

A decision is expected soon on whether the army will replace its 40-year-old Leopard tanks with the latest German Leopard, the American Abraham or the British Challenger 2.

The navy will acquire three new destroyers and two new landing vessels, and the airforce will replace its ageing F/111 fighters.

Hill said an unprecedented level of recent deployments by Australian forces, including participation in the "coalition of the willing" in Iraq, demonstrated that Australian forces were not equipped to face "new challenges".

"These include the threat of terrorism, concerns associated with the proliferation of weapons on mass destruction and the risk of failed states within our region," Hill said.

"The global situation has also brought our responsibilities, as an alliance partner of the United States, into sharper focus."

Australia was one of the staunchest allies of the US in its war against Iraq, sending more than 2,000 troops and personnel to the Gulf.

The defence plan did not make specific provisions for participation in a US-led missile defence shield, but Hill said Canberra was "committed to the concept" and hoped to soon sign a memorandum of understanding with the US.

"The air warfare destroyers that we're purchasing they would have the capacity to significantly contribute to missile defence in the future," he said.

Cosgrove welcomed the government's decision to commit more funds to bring Australia's forces up to world standards.

He said the level of technology such as that used in the Global Hawk was being added to the military of other countries and Australia should not risk being left behind.

"Fifty billion dollars is the price we must pay to modernise against an uncertain future. Terrorism has to be the number one threat because it reveals itself very grudgingly, if at all, and with great violence when it does."

WAR.WIRE