For the first time, Chinese troops will train with Australian and US soldiers in a land exercise in the Northern Territory.
Troops from the three nations will take part in Exercise Kowari that aims to train them in outback survival techniques.
The decision emerged from the visit of General Fan Changlong, second-in-command of the People's Liberation Army, to Canberra on Thursday.
General Fan held talks with Prime Minister Tony Abbott, Defence Minister David Johnston, Foreign Minister Julie Bishop and defence force chiefs.
Exercise Kowari will be the first trilateral exercise involving Australian, Chinese and US personnel.
It will provide those taking part with an understanding of the basic principles, procedures, techniques and equipment that best support survival in a harsh environment, Senator Johnston said.
The October exercise will involve some of the US Marines training in the Northern Territory plus Australian soldiers from the Darwin-based 1st Brigade.
Under 100 Chinese troops are expected.
The training will be held in one of the vast military training areas in the Northern Territory.
Chinese ships are now exercising with Australian vessels and those of other nations in the world's biggest maritime exercise, Rimpac 14, the US-hosted biennial military manoeuvres on and around Hawaii.
Senator Johnston said Kowari was an important milestone in defence co-operation between Australia, China and the US.
In his talks with General Fan, Senator Johnston noted the importance of regional maritime security - a passing reference to territorial tensions between Beijing and its neighbours in the South and East China Seas.
"We've agreed to discuss further how Australia and China can work closely to promote maritime security co-operation in the Indo-Pacific region," he said.
