Australia is to boost its army by 2,600 troops to deal with rising security threats in the Asia-Pacific region and to contribute to military missions in Iraq and Afghanistan.

This is the largest expansion of Australia's armed forces in years. The 2,600 troops will be recruited over the next decade. It will cost Canberra around $7.6 billion to fund two new battalions.

Australian Prime Minister John Howard

Prime Minister John Howard said Thursday the recent chaos in East Timor and in the Solomon Islands where Australia has sent troops to help restore peace prompted a review of the country's military capability.

"I have believed for a long time that because of our additional commitments in our region and my strong belief that situations like that which arose in the Solomon Islands are likely to recur in our region and given that Australia has a prime responsibility to respond to these situations I've believed for some time that we've needed a larger army," he said.

Australia expects instability in its South Pacific neighborhood to worsen in the years ahead. The prime minister warned that Papua New Guinea and Vanuatu could be potential new trouble spots.

Papua New Guinea, Australia's nearest neighbor, is beset by economic and social problems, including a serious AIDS epidemic. Mr. Howard said it presented a big dark cloud for Australia's planners.

Mr. Howard also said the military expansion would enable Australia to continue to contribute to the U.S.-led campaigns in Iraq and Afghanistan.

Around 4,000 Australian troops are stationed overseas out of a total of 51,000 military personnel.

The first battalion of new soldiers will not be ready for foreign deployments until 2010. The army expansion will bring Australia's troop numbers to a level not seen since the Vietnam War.

This significant military expansion is likely to be received with caution in Southeast Asia, where Mr. Howard's close alliance with the United States is viewed with concern. Earlier comments by both governments about Australia's claimed role as sheriff in the region have sparked suspicion of Australia's growing military posture.

Despite the boost in troops numbers Canberra has said it will not be making a major contribution to a U.N. peacekeeping force in southern Lebanon.