The Prime Minister says a new dry dock at Henderson will help bolster Australia's defence capabilities while "turbocharging" the naval shipbuilding industry.
Speaking in Perth on Tuesday, Scott Morrison said more than $4 billion would be committed to the facility, which would be used for the construction and servicing of large naval and commercial vessels.
Mr Morrison said the dock would boost the country's maritime defence capabilities while creating thousands of jobs over several years.
"This work will ensure that we can maintain our sovereignty, our flexibility, and offer long term value-for-money outcomes for the Australian public," he said.
"We expect construction to commence in 2023, 2024, with initial operation capability by 2028 and a final operating capability by 2030."
Mr Morrison said the "world-class shipyard" would generate 500 jobs during construction and about 2,000 jobs once completed.
It would be Australia's only dry dock outside of Sydney.
WA to play key role in AUKUS partnership
The Prime Minister said HMAS Stirling, at Garden Island south of Perth, would remain home to Australia's current and future submarines.
"Henderson, HMAS Stirling and Fleet Base West all form a key part of our maritime capability and our nation's security, particularly given the strategic importance of the Indian Ocean, and will continue to do so for decades to come," he said.
Mr Morrison said the Defence Department would consider what was needed in WA to enable more visits from US and British nuclear submarines.
He said the government would invest more to build on local expertise and knowledge in WA.
"The ability of US and UK nuclear-powered submarines to be here on the west coast, and ultimately we'd like to see them on the east coast as well, is all part of what our plan is as we continue to push forward our AUKUS partnership."
The partnership aims to deepen diplomatic, security and defence ties between the three nations and help Australia acquire nuclear-powered submarines.
The partnership controversially spelled the end of the Australian government's $90 billion deal for French-designed submarines to be built in Adelaide.
Mr Morrison said it was important to enable US and UK vessels to perform operations out of Australia.
He also believed Australia's own nuclear submarine fleet would arrive "well before 2040".
WA government says plan should include shipbuilding
The WA Government welcomed the announcement, after years of lobbying the Commonwealth for a greater role in the maintenance and construction of naval vessels.
"For over two years we've been working with the federal government on this dry dock plan," Defence Industries minister Paul Papalia said.
"What we see now is the ability to move forward and get working on the project."
Mr Papalia said the decision recognised WA as a strategic location for the country, with an important role to play in managing its naval fleet.
"What we also need, in the future, is a commitment from the federal government for our naval shipbuilders," he said.
"A dry dock is fine, it doesn't create work on its own.
"What you need to do is build ships inside the dry dock, and our shipbuilders in Western Australia do not have a commitment to continuous shipbuilding like South Australian shipbuilders do."
Mr Papalia also raised concerns Australia could be stuck without any dry dock facilities, with the Captain Cook dry dock in Sydney due to be closed for extended maintenance from 2026, and the new facility in Perth not due to open until some time after that.
