Under a landmark military arrangement with the United States and United Kingdom, Australia will command a fleet of eight nuclear-powered submarines within the next three decades.
The AUKUS deal, which is forecast to cost up to $368 billion, sparked an angry reaction from China, which accused Australia of going down a "path of error and danger".
Former prime ministers Paul Keating and Malcolm Turnbull also criticised the agreement and questioned how Australia would maintain its sovereignty if the submarines relied on US technology and personnel.
But Defence Minister Richard Marles said the commentary was "plain wrong", adding there was no agreement to join the US during a potential future conflict with China.
"I couldn't be more unequivocal than that ... in all that we do, we maintain complete sovereignty for Australia," he said.
"The moment that there is a flag on the first of those Virginia-class submarines in the early 2030s is the moment that submarine will be under the complete control of the Australian government of the day."
Mr Marles said while the submarines could be used in the case of a conflict, the main intent was for them to protect vital trade routes through the South China Sea and contribute to regional stability.
"A lot of our trade goes to China, but all of our trade to Japan (and) to South Korea - two of our top five trading partners - goes through the South China Sea," he said.
"The maintenance of the rules-based order as we understand it, freedom of navigation, freedom of overflight is completely in Australia's interest and we need to make sure that we have a capability which can back up that interest."
Trade Minister Don Farrell, who met with his Chinese counterpart Wang Wentao in February, said he was hopeful discussions to improve Australia's trade relations with Beijing wouldn't be affected by the AUKUS announcement.
"Everything is pointing in the right direction for stabilisation of the relationship and I'd be very confident that process will continue," Senator Farrell said.
"We want a stable relationship with China, we want a mature relationship with China.
"At the same time we want to make sure that everything we do is in our national interest and dealing with the issues of our national security."
Senator Farrell said he was confident the current $20 billion in trade sanctions imposed by China in 2020 could still be resolved.
But opposition defence spokesman Andrew Hastie said it was important to be realistic following the Chinese government's comments about the AUKUS arrangement.
"I don't think the relationship is at its best at the moment," he said.
"I think AUKUS is going to make it difficult for (the government) to get back into a place where they want to go (with China)."
As part of the AUKUS deal, the Osborne shipyard in South Australia will become the partners' fourth nuclear-powered submarine production line, alongside facilities in the US and UK.
Adelaide's Flinders University has struck an agreement with Manchester University and the University of Rhode Island to deliver nuclear education programs.
SA Premier Peter Malinauskas said the partnership meant his state would become home to international nuclear expertise before construction begins as students learn the skills needed to work on the vessels.
