India, Aug. 12 -- Australia and Vanuatu are close to signing an "ambitious" new strategic pact that will see the federal government plough about half a billion dollars into the Pacific island country over the next decade.

Vanuatu's Council of Ministers is widely expected to endorse the Nakamal Agreement later today after months of negotiations between the two countries.

Foreign Minister Penny Wong, Defence Minister Richard Marles and Pacific Minister Pat Conroy will then join Vanuatu's Prime Minister Jotham Napat and other senior leaders on the island of Tanna tomorrow to give their initial agreement to the pact, ahead of a formal signing next month.

Napat's office said in a statement the development and security agreement would "cover...