Under Defence Capability Plan Joint Project 2008 Phase 5A, Defence is already in the process of acquiring part of the Intelsat IS-22 UHF payload providing coverage over the Indian Ocean Region.
A contract for the provision of this payload was signed with Intelsat in April 2009.
The announcement involves approval to exercise the Government's option to purchase the full ultra-high frequency (UHF) payload on the Intelsat IS-22 communications satellite at an additional cost of around $193 million.
This brings the total IS-22 payload purchase cost to $475.1 million.
"Purchasing the full satellite payload will improve operational effectiveness and enhance the communications support to Australia's deployed forces in the Middle East and Afghanistan," Senator Faulkner said.
Coinciding with the visit by the US Department of Defense Vice Chairman of the Joint Chiefs of Staff, General James Cartwright, Senator Faulkner also announced that Australia and the US had signed a Memorandum of Understanding (MOU) on sharing their narrowband UHF communications resources.
"This initiative will provide the US added communications capacity for its operations in Afghanistan by utilising the Australian payload on the IS-22 communications satellite.
"In turn the ADF will gain access to communications capacity over the Pacific Ocean region from US satellite resources," Senator Faulkner said.
The UHF Communications MOU complements the Wideband Global System satellite partnership between Australia and the US.
The arrangement will result in significant savings for both nations, provide a more robust communications capability for the warfighter and add another dimension to the Australian-US Alliance.
The Intelsat Corporation will launch the satellite in 2012.
US Vice Chairman of the Joint Chiefs of Staff General James Cartwright and Vice Chief of the Defence Force Lieutenant General David Hurley exchanged the SATCOM MOU in Canberra last week.