The UK and Australia are to work together on the building and delivery of the Royal Navy's Type 26 frigate programme.
Both countries have signed a Memorandum of Understanding to collaborate on the project, as well as the Royal Australian Navy's Hunter class frigate programme.
Defence Secretary Ben Wallace said: "This agreement demonstrates this Government's ongoing commitment to the Type 26 shipbuilding programme whilst supporting our Australian allies to design and build the Hunter class frigate.
"As we look to the future of our respective navies, our shared continued cooperation will benefit our close alliance and support the industrial supply chain to grow each nation's shipbuilding sectors."
The agreement allows both nations to use the two programmes to create jobs and support the growth of the countries' economies, the Ministry of Defence (MOD) said.
It will also see the countries share information on shipbuilding.
Australian Minister for Defence, Linda Reynolds, said: "There are currently seven Australian companies contracted for work on the UK's Type 26 programmes and this agreement supports the close co-operation between UK and Australian industry.
"We are already seeing the benefits of cooperation on the two programmes, with Australian workers involved in the Type 26 build ready to come home and help build the Hunter class frigates in South Australia."
BAE Systems was awarded a £3.7bn contract for the first three Royal Navy Type 26s, although five more are set to be built.
The ships, which will be nearly 150m long, will eventually replace the Navy's dedicated submarine-hunting Type 23 frigates and are designed to protect the nation's strategic deterrent and the new Queen Elizabeth-class aircraft carriers from enemy submarines.
The vessels will also be equipped with a Sea Ceptor anti-air defence missile system and a flight deck capable of handling aircraft up to the size of a Chinook helicopter.
The frigates are all being named after UK cities and are expected to start entering service from the mid-2020s.
Meanwhile, prototyping for Australia's Hunter class frigate programme is set to begin by the end of 2020.
Cover image: Computer-generated image of a Type 26 Frigate (Picture: MOD).