The institute said Australia's own power in Asia was holding steady.

"This increase in ranking is more a function of Russia's decline since 2018 than Australia's rise," the report said.

"Australia lost standing in the resilience and future resources measures ... yet Australia trended upwards for diplomatic influence, cultural influence and economic relationships."

Of the 27 countries assessed in the report, Australia ranked second for defence networks compared to other nations in Asia.

However, Australia was overtaken by Indonesia and South Korea for diplomatic influence in the broader region.

"There is evidence that a 'honeymoon' effect from a change of government reflected in the 2023 Asia Power Index has worn off in 2024," the report said.

"Experts surveyed were less enthusiastic about Prime Minister Anthony Albanese's leadership at the regional level and Australia was somewhat less active in meeting diplomatic counterparts, in comparison to an initial round of regional engagement after the government was sworn in in 2022."

The power index showed while the US was the most powerful nation in the region, China had topped the rankings on military posture for the first time.

However, the overall gap in standings between the US and China is the largest it has been since the annual reports began in 2018.

"China's power is neither surging nor collapsing. It is plateauing at a level below that of the United States, but still well above any Asian competitors," the report said.

The institute also found India had overtaken Japan to be the third most powerful nation, driven by strong economic growth after the COVID-19 pandemic.

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