Australia and the United States Monday signed an agreement paving the way for greater cooperation in the surveillance of space.

"Australia and the United States shared a deep concern about the increasingly interdependent, 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.

US Defence Secretary Robert Gates said Australia and the US were working "hand-in-hand" to enhancing their military cooperation in relatively new domains such as space and cyberspace.

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

Discussions on this issue take place in January, he added.

In Melbourne for annual defence and security talks with Australian officials, Gates said that the two nations would look set up a group to begin developing options for enhanced joint defence cooperation on Australian soil.

But he said reports that this would ultimately include expanding training opportunities and the US making greater use of Australian bases were as yet premature as no final decisions had been made.

Gates, who was joined in the talks by US Secretary of State Hillary Clinton, his Australian counterpart Stephen Smith and Australian Foreign Minister Kevin Rudd, said the Australia-US alliance had "never been more important".

"We stand ready to confront the challenges of this new century," he said.