Prime Minister James Marape said as many as 10,000 PNG citizens could serve in the Australian Defence Force as part of the treaty while the Pacific nation builds on its own 7000-strong military.
"This reflects the depth of trust, history, and shared future between our two nations," he said in a statement on Thursday, which stressed the treaty was about strengthening PNG's domestic security and not about geopolitics.
"Both forces will train and operate side by side, but sovereignty is never compromised."
It comes amid a tussle for influence in the Pacific with China trying to sign its own policing and security deals, which Australia is vehemently against.
Prime Minister Anthony Albanese said he welcomed the treaty's approval by PNG's cabinet.
"Our two nations are the closest of neighbours and the closest of friends, and this treaty will elevate our relationship to a formal alliance," he said in a statement.
"I look forward to signing the treaty with Prime Minister Marape soon."
Mr Marape said the Pukpuk treaty respected third-party relationships, noting both nations maintained defence relationships with other nations.
Other arrangements between Australia and PNG lock out a Chinese security presence.
"Papua New Guinea is a big country with over 10 million people and security fragility is evident and it is PNG's interest to develop our security forces to best standards," Mr Marape said.
"This treaty allows PNG's defence capacity to be elevated by leveraging Australian defence capabilities.
"This partnership strengthens our ability to respond to our country's key security priorities."
The pact would help modernise PNG's defence, including by increasing its ability to police its maritime borders, air force training and the establishment of a special forces regiment, Mr Marape said.
"This treaty is not just about maintaining barracks and boats. We are investing in both hardware and software for defence so that we can effectively police our borders and safeguard our nation," he said.
An Australian government spokesperson said the treaty would elevate the relationship with PNG to an alliance, their first in 70 years and only Australia's third overall after the United States and New Zealand.
The pact was set to be signed by Mr Albanese and Mr Marape, during celebrations marking PNG's 50 years of independence in Port Moresby in mid-September.
However, it fell apart at the last moment when it failed to obtain the approval of the PNG government's cabinet, as ministers were away in their electorates during celebrations.
The hurdle was cleared on Wednesday, paving the way for it to be formally sealed within a week, with Mr Marape expected to be in Australia for Sunday's NRL grand final.
Mr Marape had said the pact was the "fastest, quickest, earliest" way to ensure the protection of his nation, which did not have the defence force it needed to defend itself.
There were concerns China had tried to scuttle the deal, but this was denied by the PNG leader, who said there was no sticking point over the pact.
The delay was due to PNG's democratic processes, he said in September.
10°C