Port Kembla is one of three locations being considered as a new base for Australian and visiting nuclear-powered submarines, under a federal government plan to be announced on Monday.
Prime Minister Scott Morrison will tell a Lowy Institute forum that defence officials have been tasked with talking to the NSW and Queensland governments on setting up the multibillion dollar base at either Port Kembla, Brisbane, Newcastle.
Fleet Base West in Western Australia will remain home to the current Collins class and future nuclear-powered submarines, given its strategic importance on the Indian Ocean.
"(But) establishing a second submarine base on our east coast will enhance our strategic deterrent capability, with significant advantages in operational, training, personnel and industrial terms," Mr Morrison will say.
"An optimal east coast base would provide home-ported submarines with specialised wharfs, maintenance facilities, administrative and logistics support, personnel amenities, and suitable accommodation for submarine crews and support staff.
"It would also enable the regular visiting of US and UK nuclear-powered submarines."
With initial work to be completed by the end of 2023, the three potential sites have been chosen because of their proximity to industrial infrastructure, large population centres, deep water, maritime training and weapons storage and loading facilities.
Mr Morrison said more than $10 billion would be needed to meet the services and facilities needed for the shift from Collins to the nuclear-powered submarines.
Defence Minister Peter Dutton said on Sunday he expected a decision "within the next couple of months" on whether a British or American submarine design will be used.
He was confident the first of the submarines could be acquired "much sooner" than 2040.
The massive project comes as Australia faces what Mr Morrison describes as its most "difficult and dangerous security environment in 80 years".
The government is lifting defence spending to almost 2.1 per cent of GDP this year, with $578 billion planned to be spent over the next decade.
The prime minister will tell the forum the "unprovoked, unjust and illegal war" launched by Russia in Ukraine was a sign of a "new arc of autocracy" seeking to challenge and reset the world order.
"We face the spectre of a transactional world, devoid of principle, accountability and transparency," he says.
The implications of the Ukraine crisis would not only be felt in Europe but inevitably stretch to the Indo-Pacific.
"Militarisation is expanding and evolving rapidly," Mr Morrison says.
"Australia seeks to work with all countries to ensure a peaceful, stable and prosperous region - however, we cannot be naive.
"The challenges we face continue to mount. They require us to increase our resilience, expand our capabilities and harden our defences." - AAP