The prime minister met with His Majesty Sultan Haji Hassanal Bolkiah at The Lodge on Monday during the first leg of his four-day state visit to Australia.
They signed a statement of declaration on a comprehensive partnership between the Australian and Brunei Darussalam governments.
The two countries share an interest in action on climate change, strategic defence collaboration and food security in the region.
As part of the partnership, Australia and Brunei Darussalam will work together on trade and investment, maritime security, education, the transition to net-zero and increased food security.
It will also allow the two nations to deepen defence co-operation and ensure regional stability.
Mr Albanese said he was delighted to welcome His Majesty to Australia and embark on the comprehensive agreement.
"The partnership offers a chance to co-operate on the net-zero transition in the region, strengthen trade ties and deepen cooperation on defence and security," he said.
"It affirms our shared support for ASEAN as the region's central platform for open, transparent and rules-based dialogue."
His Majesty will travel to Darwin later in the week to visit Robertson Barracks and meet Australian Defence Force personnel.
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