The investment in tech company PsiQuantum is part of the government's manufacturing push in its Future Made in Australia Plan.
The joint funding will be to help the company build the world's first fault-tolerant quantum computer in Brisbane, where large calculations can be made with a low-error rate.
PsiQuantum, which was co-founded by Australians professors Jeremy O'Brien and Terry Rudolph, will set up its Asia-Pacific headquarters in Brisbane with the government funding.
It's expected 400 jobs will be created through the manufacturing and production partnership.
Prime Minister Anthony Albanese said the partnership could transform Australia into a quantum powerhouse.
"We are proud to be working with the Queensland government to make visionary investments in the future of our nation," he said.
"This investment shows we are serious about building a strong quantum ecosystem here in Australia."
Forecasts by Boston Consulting Group predicted investments in the fault-tolerant quantum computer could lead to an extra $48 billion in GDP and 240,000 new jobs by 2040.
Industry Minister Ed Husic says the funding will allow for companies in the quantum field to have a sizeable presence in Australia.
Ed Husic says Australia can become a tech manufacturing powerhouse. (Mick Tsikas/AAP PHOTOS)
"(PsiQuantum) left our shores because they didn't think that we'd had an interest or a desire to back this type of technology. They've now set up a firm considered a global frontrunner," he told ABC TV on Tuesday.
"Now these Australians want to come home to ensure that we can become a tech manufacturing powerhouse."
Mr Husic said the company was expected to create the fault-tolerant quantum computer by 2026 or 2027.
"If we get the point ... we unlock huge computer processing power than can be applied to help crack some of the biggest problems that not even the strongest supercomputers today can do," he said.
"We want Australia to become a centre for quantum growth for the rest of the planet."
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