Australia is reportedly expected to buy five British-designed nuclear submarines as part of the landmark Aukus deal.
The submarines are a combination of British designs and American technology, a US official said.
The Aukus pact, between the US, UK and Australia, will see the three countries working closely on defence, with the latest deal supposedly seeing Australia buy five US Virginia class subs.
It is expected to involve a modified version of the Astute-class submarine, currently in the design phase – which has left Prime Minister Rishi Sunak "buzzing", according to reports.
The billion-pound deal will likely see the submarines assembled in Australia.
Reports also suggest the submarines should be delivered to Australia by the late 2030s, presenting a new challenge to China.
If completed, the deal would be a "trilateral" effort, Australia's Defence Minister said.
Richard Marles also told the Australian parliament it is "difficult to overstate the step that, as a nation, we are about to take".
"Clearly these submarines will have the capability to operate at war, but the true intent of this capability is to provide for the stability and for the peace of our region," Mr Marles said.
It is expected the UK subs will not see service for some time, with reports stating Australia's best bet is to involve the US' rotation of nuclear submarines to the country from 2027.
This would then be followed by the purchase of three Virginia-class subs in the early 2030s.
Full details of the Aukus deal are due to be announced next week.