Nuclear-powered submarines and training for the highly skilled workers needed to operate them are central to the defence budget.
Under an AUKUS agreement, Australia is set to acquire up to eight nuclear-powered boats with a price tag of $368 billion.
As the military transforms to meet new challenges, defence spending is set to hover around two per cent of the nation's economic output in coming years, which is widely considered a minimum standard.
Overall defence spending will be $55.68 billion in 2024/25, representing 2.02 per cent of gross domestic product.
An extra $50 billion will be spent over the next decade.
Defence Minister Richard Marles said the government was making the biggest commitment to defence spending in decades.
"This is about ensuring our Australian Defence Force is fit for purpose and equipped with suitable capabilities to meet present and future challenges," he said.
The Australian Submarine Agency, which will manage the nuclear submarine program, will cost taxpayers $383 million from July 1.
The agency will grow its workforce by more than 200 people, employing 883 staff within two years.
Building the workforce to support the nation's acquisition of the nuclear-powered submarines will cost $101.8 million over seven years.
This includes $16.3 million over six years for 3000 scholarships for students studying undergraduate courses relevant to the submarine program.
The new Skills and Training Academy will get $68.4 million over seven years, with $34.7 million over six years for the Shipbuilding Employment Pathways to deliver a pilot apprenticeship program in trades needed.
A parliamentary committee will also be established to bring oversight and accountability to defence.
The government will spend $28 million to ensure the US and the United Kingdom get easier access to military information under the AUKUS deal.
The federal budget also confirms $144.3 million in funding over two years to support Ukraine against Russia's invasion.
