Anthony Albanese held one-on-one talks with Philippines President Ferdinand "Bongbong" Marcos Jr in Manila on Friday, the first bilateral visit by a sitting prime minister to the country in 20 years.
The two countries upgraded ties with both leaders signing off on a new strategic partnership.
It comes as Australia had been looking to step up joint military patrols in the region alongside the Philippines, following escalations over territory disputes in the South China Sea.
Australians looking to travel to the Philippines will also be able to obtain a new working holiday visa, allowing them to stay in the country for up to a year.
Filipinos can also come to Australia for 12 months under the visa.
An agreement was also signed for a collaboration to help develop healthier soils for agricultural production in the Philippines, which will be backed with more than $4 million in Australian funding.
Mr Albanese said in opening remarks to the bilateral meeting at Malacanan Palace he hoped to take the relationship with the Philippines to "an even higher level".
"We see our future as very much lying in our region, and the prospect of increased trade and economic engagement is very good," he said.
"We also have important security issues, where we have common views about the need to uphold international law.
"Australia's position on that will be consistent, as we have always been including, recently, over issues relating to the South China Sea."
During bilateral talks, the pair discussed strengthening regional and national security along with trade and economic relations.
Mr Marcos said while it had been several decades since the last formal talks with an Australian leader in the country, the relationship was strengthening.
"The Australian shift, maybe a decade or two ago, saying Australia's future is with Asia, has become a reality," he said.
"That's why the closeness between our countries ... is terribly important."
The Philippines president said both countries were committed to regional security.
"I'm confident these partnerships will drive innovation, create opportunities and foster a deeper understanding between our countries," he said.
Defence ministers of both countries will also meet annually for regular meetings under the partnership.
Mr Albanese also said ties would be strengthened within Australia, with a new Philippine Institute to be set up at the Australian National University in Canberra.
"Australia is ambitious for what we can achieve with the Philippines and with the region," he said.
The prime minister's visit to the Philippines follows several ministerial trips to the Asian country to shore up defence ties, including by Deputy Prime Minister Richard Marles last month when he observed joint military exercises.
Earlier on Friday, Mr Albanese laid a wreath at the Jose Rizal Monument, which commemorates the executed Filippino nationalist advocate.
Following the wreath laying, the prime minister was given a ceremonial welcome at the presidential palace, where he was greeted with a military band and Waltzing Matilda played on multiple marimbas, before he inspected the troops.
The visit is part of a growing focus on Southeast Asia by the government amid escalating regional tensions in the Indo-Pacific and Chinese aggression.
Relations have been bolstered in recent months with neighbouring nations including Vietnam, Singapore and Indonesia.
Later on Friday, Mr Albanese will fly to India to meet with fellow world leaders in New Delhi for the G20 Summit
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