Key US ally Australia slashed Aus$5.5 billion (US$5.57 billion) from its defence budget Tuesday as part of sweeping cuts, deferring or scrapping jet and weapons deliveries and sacking 1,000 staff.

Defence saw the largest cuts of any sector in the 2012-13 budget, with $5.5 billion in savings scheduled over the next four years, but the government promised the reductions would have "no adverse impact on operations" overseas.

Australia has some 1,500 troops serving in Afghanistan as well as peacekeeping deployments in East Timor and the Solomon Islands, and it is set to host a new United States military base in the Asia-Pacific.

Some 2,500 US Marines are to be stationed in northern Australia by 2016-17 under a deal inked with US President Barack Obama last year which will see a major expansion of military ties between the two nations.

But Canberra is to delay the acquisition of 12 F-35 Joint Strike Fighter jets to save Aus$1.3 billion, with another Aus$1.7 billion to come from cancelling 35 self-propelled howitzer artillery pieces and other projects.

Lockheed Martin's troubled F-35 programme has laboured under soaring costs and delays, with claims the stealth jet has now been outclassed by new Russian and Chinese aircraft.

Several other countries including the US and Italy have announced they are delaying or cutting their F-35 orders.

Australia will also delay upgrades to defence facilities, saving Aus$1.2 billion, with 1,000 civilian defence personnel to be sacked to save Aus$360 million.

The Hercules C-130 aircraft will be retired early "in order to minimise costs associated with maintaining and operating the ageing fleet", saving Aus$250 million.

But Defence Minister Stephen Smith said: "The provision of equipment to defence personnel on operations will not be adversely affected and there will be no adverse impact on the number of military personnel in the Australian defence force.

"The decisions... have all been carefully designed to protect our servicemen and women and our defence operations, and to minimise the impact on core capabilities."

Smith said further cost-cutting measures would be taken to fund a raft of priority projects including replacing the Collins class submarine and Caribou transport aircraft and upgrades to Orion patrol aircraft and ANZAC class ships.

The navy would review its international programme and "reprioritise" its operations, while the army would reduce its use of the M113AS4 armoured vehicle and M1A1 Abrams tanks, with some to be retired into storage.

Canberra committed an extra Aus$1.3 billion to operations in Afghanistan and the Middle East, with Aus$77 million for East Timor and Aus$44 million in the Solomons.

Australian troops are due to begin pulling out of Afghanistan by 2014 and Smith said there "may well (be) the start of a draw down of Australian troops in East Timor and the Solomon Islands" in 2013.

"Taken with transition in Afghanistan, these drawdowns will mean a readjustment of both Australian defence force posture and wider defence priorities in the coming years," he said.

Australia last reviewed its defence force strategy in 2009 and the government recently announced a fresh blueprint would be drawn up in 2013, a year ahead of schedule, as military focus shifts towards the Asia-Pacific.