The nation currently sells about A$2bn (£1.15bn; $1.6bn) in defence equipment each year, making it the 20th largest arms exporter.
Manufacturers would now be offered government-backed loans to stimulate the industry, PM Malcolm Turnbull said.
Aid groups said the move would not help global efforts to build peace, an assertion rejected by the government.
The nation said it would primarily focus on boosting exports to the US, UK, Canada and New Zealand, but it would also target markets in Asia and the Middle East.
“This is all about Australian jobs,” Mr Turnbull told reporters on Monday, adding that “the goal is to get into the top 10”.
The expansion includes setting up a A$3.8bn loan scheme to help Australian companies sell defence equipment overseas.
The government will also establish separate agencies to better co-ordinate and promote industry exports.
Defence Industry Minister Christopher Pyne said prospective buyers would face stringent checks to ensure “[we] don’t get into markets where we don’t want to be”.
Critics said Australia should not deepen its investment in defence exports.
“We should not be getting into the game of marketing weapons which kill, maim, and bring great sorrow and destruction to communities around the world,” Marc Purcell, chief executive of Australian Council for International Development, told the Australian Broadcasting Corp.
However, Mr Turnbull said nations could not forgo defence spending because the “price of liberty is eternal vigilance”.
“So that is why every nation, responsible nation, including our own, sets out to have the capabilities to defend itself, whatever and however circumstances may develop in the future,” he said.
The US is the world’s largest arms exporter, making up a third of all sales, according to the Stockholm International Peace Research Institute.
The next biggest exporters are Russia, China, France and Germany and the UK. (Courtesy BBC)