Australia needs to beef up its military might on the northwest coast, where most of the country's resource and mining activities were located, according to the initial recommendations of a review being conducted by the Defence Ministry.

Preferably, Australia must heighten its navy exercises in the region - home to Western Australia and Queensland - two states that host both the country's mining and natural gas projects that largely fuel the domestic economy.

The call to improve its military posture in the area, Defence Minister Stephen Smith said, will at least build up an invisible firewall that would deter possible attacks, even terrorist incursions.

"The review makes the point that there is a perception in the north and north-west of Australia of a lack of visibility, which undermines the notion of the defend Australia policy," Smith was reported by the Agence France Presse (AFP) as saying.

He clarified, however, that the area, where numerous offshore oil and gas projects were being conducted, is still far from attracting any from of attacks, citing the report, which will be completed by March this year.

"The potential for terrorist attacks against oil, gas and other resource industry infrastructure in the North West is also an important consideration, but the level of vulnerability to such attacks can be exaggerated," the report said.

The area's best defence so far it is its natural make, which will push would-be attackers to their limits to plan and execute any form of assault.

Pilbara is in Western Australia and is the country's centre of iron ore production while Queensland hosts coal and gas projects.

Together the two states contribute billions of dollars to the national coffers, being delivered by the resource and mining industries that experts said easily reach a total worth of more than $200 billion.

The recommendation came as neighbouring nations, led by China, India and Indonesia, started increasing their military presence in the region, acts that analysts said were spurred by the perceived presence of oil reserves in the South China Sea.

Late last year, Prime Minister Julia Gillard approved the planned stationing of some 2500 U.S. Marines in the region, which is part of Australia's bilateral military agreement with the United States.

Long existing, the pact was reinvigorated during the state visit of U.S. President Barack Obama in the country November last year.

Apart from strengthening its military alliance with Washington, Canberra plans to improve the capability of its navy by acquiring new submarines and destroyers over the next three years, AFP wrote.

The government also plans to purchase up to 100 new F-35 combat jets to complement the existing muscle of its air force and most of these aircrafts will be deployed to bases around the region.