The historic defence treaty between Australia and Britain will help the two allies meet future challenges at home and abroad, British Defence Secretary Philip Hammond says.

Mr Hammond and Australian Defence Minister Stephen Smith signed an agreement at the Australian-UK Ministerial (AUKMIN) meeting in Perth on Friday which will see the two countries share information, technology, policy and personnel in a bid to minimise costs.

With the agreement aimed at closer ties in cyber security, defence reform, equipment, and science and technology, Mr Hammond said changing roles in Afghanistan and budgetary constraints were immediate shared concerns for both countries.

"It is the likemindedness of our approach that makes it so easy for us to work together and be so productive," Mr Hammond said in his opening remarks at AUKMIN.

"And the treaty gives us a framework on which to build on the existing very high level of co-operation.

"As we draw down from Afghanistan ... we need to think about how we maintain levels of interoperability with each other.

"Secondly, we all face budgetary challenges over the coming months and years, and looking at how we manage our fleets of vehicles, aircraft and ships and how we procure our equipment, we need to get the maximum leverage from our dollars and pounds."

Mr Smith, who hoped the treaty would be named after his home town of Perth where it was signed, said the agreement would be deeply significant for the future of the bilateral relationship.

"For the last couple of years we have been working very hard ... to reflect the importance of the historical relationship between Australia and the United Kingdom, and to underpin the ongoing strategic and practical co-operation," Mr Smith said.

"It reflects our history and our closeness. And if the treaty becomes known as the Perth Treaty then that is something I will not object to."

The treaty is expected to see Australia use the British-designed Type 26 Global Combat Ship when it comes time for the nation to consider a future frigate program.

Frigates are expected to be on the discussion agenda along with the transition in Afghanistan, cyber security and international threats such as Syria, Iran, and North Korea.