Australia has signed an agreement to send around 300 police and civil servants to Papua New Guinea, to help fight crime and corruption.
The move follows Australia's intervention in the Solomons
The deal was signed in PNG capital Port Moresby by the two countries' foreign ministers, after a six-month dispute over legal immunity for the personnel.
It is part of Australia's new role as peacekeeper in the South Pacific.
Last year Australia led a force of 2,000 regional troops to restore order in the Solomon Islands.
The BBC's Phil Mercer in Sydney says Papua New Guinea is expected to pose even greater challenges for the Australian police and bureaucrats.
In a compromise, anyone from the deployment who breaks
the law will be prosecuted in Australia, after a committee of
representatives from both countries has assessed the case, AFP news agency reported.
Thursday's deal will mean that up to 230 Australian police will arrive in Papua New Guinea to fight crime, and to help ensure that the country does not become a base for terrorism.
"It is one of the most important single developments in
Australian foreign policy in recent years," Australia's Foreign Minister, Alexander Downer, said during the
"This takes the relationship
forward in a dramatic way," he added.
Under the deal, costing a reported A$800m ($560m), around 70 Australian officials will take up positions in Papua New Guinea's public sector.
At least four Australian judges will sit on the Papua New Guinea bench and an Australian will become the country's top lawyer, the solicitor-general, to try to improve the justice system.
Australian civil servants will also take on senior roles in economic management, immigration and prisons.
Our correspondent says the agreement is widely seen as a turning point in the relationship between the Pacific neighbours.
Papua New Guinea was an Australian colony up until 1975.
The deal was instigated by Australia and initially opposed by Papua New Guinea's nationalist Prime Minister, Michael Somare.
Papua New Guinea has deep financial problems, high levels of unemployment and an alarming incidence of HIV and Aids, he adds.