Australia's ageing Collins-class submarines have been listed a "product of concern" with only one of the six boats fully operational.
Following the recommendation by Defence, enhanced ministerial oversight of the submarines' sustainment will be enacted amid a plan to extend their lives by another decade.
Defence Industry Minister Pat Conroy on Friday said Defence would develop a remediation plan by early next year.
"By listing Collins class sustainment as a Product of Concern, the government is demonstrating its commitment to remediating these challenges and ensuring the Submarine Enterprise, which includes Defence and ASC Pty Ltd, delivers and sustains improved performance," he said.
Australia operates a fleet of six Collins-class submarines which entered service from the mid-1990s, but have recently been hit with corrosion issues and maintenance delays.
Last month, media outlets revealed the navy had been left with just one fully operational boat as the rest of the fleet underwent urgent repairs or waited for scheduled upgrades.
Australian National University expert associate Jennifer Parker said the announcement raised questions over the viability of putting all six submarines through the life of type extension.
"There is a lesson here for Australia in allowing our naval capabilities to operate for so long without robust plans to replace them," she told AAP.
"Once you get to this point, whether it be our ships or submarines there are no overnight fixes.
"Now it's a case of making the most of what we have with our current subs, and focusing on the AUKUS optimal pathway being delivered on time."
Mr Conroy pointed the finger at the former Coalition government for cutting the sustainment budget.
"This is another example of the Albanese government bringing the necessary energy and oversight to fix troubled projects," he said.
"I have convened seven Projects of Concern summits in just two-and-a-half years as minister."
