Australia and the United States on Monday signed an agreement to cooperate in surveillance of space, possibly expanding the reach of a US military network tracking satellites and space junk.

The US military increasingly relies on satellites for navigation, targeting, secure communications and intelligence gathering, and strategists worry about the potential for collisions, as well as China's investments in space defence technology.

"Australia and the United States shared a deep concern about the increasingly inter-dependent, congested, and contested nature of outer space," the two sides said in a statement, after annual security talks.

The countries "acknowledged that preventing behaviours that could result in mishaps, misperceptions or mistrust was a high priority," it added.

The accord follows accusations from the United States that China has tried to "militarise" space and the Pentagon says Beijing has invested heavily in space weaponry.

China in 2007 launched a ballistic missile to knock out one of its old weather satellites, sparking sharp criticism from Washington and around the world. The incident added over 6,000 pieces of debris to space orbits, Monday's joint statement said.

As part of the agreement, US Defence Secretary Robert Gates told reporters discussions would begin in January on possibly adding ground-based radar sensors in Australia to the US military's space surveillance network.

The network's purpose includes monitoring satellite traffic for possible collisions and seeking to prevent damage to vital defence-related satellites.

"The growing number of countries and companies placing satellites in space is also adding to the congestion, particularly in certain orbits," it said.

Gates said Australia and the United States were working "hand-in-hand" to enhance military cooperation in emerging domains such as space and cyber security.

"The Space Situational Awareness Partnership statement of principles signed today, for example, will lead to greater cooperation between our militaries in the areas of intelligence, surveillance and reconnaissance," Gates said.

No final decision had been reached yet on adding radar sensors but Australia's geographic position could fill a gap in tracking objects in space over the southern hemisphere, officials said.

"In particular, there is poor space surveillance coverage in the southern hemisphere, which compromises global" tracking of objects in orbit, the statement said.

US officials said no separate American base would be built. The joint statement said Australia preferred any radars to "be operated as joint facilities, and co-located with existing defence facilities such as at Naval Communications Station Harold E. Holt at Exmouth in Western Australia."

As part of the agreement signed Monday, Australia would gain access to US data, training and advice in space surveillance, it said.

In Melbourne for annual security talks with Australian officials, Gates also said that the two nations will set up a working group to draw up options for expanded defence cooperation on Australian soil.

Gates, at a briefing later, said no decisions had been taken but that options could include prepositioning of equipment for disaster relief in Australia, more training, more port visits by American warships and more joint use of Australian bases.