Vice Admiral Johnston, will take over in July from the current chief General Angus Campbell, who is the longest-serving head of the defence force, Prime Minister Anthony Albanese said on Tuesday.
"Vice Admiral Johnson has consistently distinguished himself with his capacity to ensure that different elements of defence work together," he added.
"His understanding of integrated defence will be critical to delivering on the priorities and recommendations of the defence strategic review, ensuring our defence force has the right capabilities and the right leadership to meet the challenges ahead."
Vice Admiral Johnston joined the military in 1978 aged 16, and was named vice-chief of the defence force in 2018, previously serving in Iraq and Afghanistan.
David Johnston joined up in 1978 and is the first Navy officer elevated to ADF chief in 23 years. (Lukas Coch/AAP PHOTOS)
His appointment marks the first time in 23 years the chief of defence force has come from the Navy.
The incoming defence force head said he was honoured by the appointment.
"I am very conscious of the responsibility that comes with the role, the strategic environment in which we find ourselves and most particularly the responsibility I have to the extraordinary men and women in the Australian Defence Force and the families who support them," he said.
Vice Admiral Johnston's elevation has prompted a shake-up of senior roles in the defence force.
Air Marshal Robert Chipman, who previously served as Chief of the Air Force, will become the next Vice Chief of the Australian Defence Force.
Air Vice‑Marshal Stephen Chappell will be appointed as the next chief of the Royal Australian Air Force.
Defence Minister Richard Marles said Vice Admiral Johnston had been pivotal to reform within the defence force.
"He has been in the engine room of all the work that we have done over the last two years and this is a moment where we need a safe pair of hands and deep experience to take our defence force forward," he said.
"David has been at the very heart of reshaping the Australian Defence Force both in terms of culture and also, importantly, as the vice chief of the defence force, in terms of the platforms and capabilities that we are seeking to acquire."
Mr Albanese also paid tribute to General Campbell, who has served in the top job since 2018.
"He has earned the respect and deep gratitude of Australia and we wish him all the very best for his future," he said.
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