Australia says it would be concerned if China signed a pact that could let it establish a military presence in the Solomon Islands.
Leaked documents purport to show plans for a security deal between China and the Pacific nation, which lies about 2,000km (1,200 miles) from Australia.
The ABC and Reuters report they have verified the draft document as genuine.
Australia has long been concerned over Beijing’s growing influence in the Pacific, its nearest neighbours.
Former Australian Prime Minister Kevin Rudd called the apparent plans “one of the most significant security developments we have seen in decades” and “adverse to Australia’s national security interests”.
On Friday, Australian Defence Minister Peter Dutton denied a suggestion his country had “dropped the ball” in the region.
“We would be concerned, clearly, about any military base being established and we would express that to the Solomon Islands government,” he told the local Nine Network.
The leaked papers set out a framework which could allow Beijing to deploy forces to “protect the safety of Chinese personnel and major projects in Solomon Islands”.
The tiny Pacific nation could also “request China to send police, armed police, military personnel and other law enforcement and armed forces”, according to the document.
There is also provision for China to “make ship visits, to carry out logistical replenishment in, and have stopover and transition in Solomon Islands”.
The Solomon Islands government has drawn closer to China in recent times, establishing formal diplomatic ties in 2019 and ditching its links with Taiwan.
But Australia has traditionally been its main security provider, regional power, and source of financial aid.
Last year, Australia deployed peacekeepers to the Solomon Islands after violent protests targeted parliament, Chinese businesses and other buildings in the capital, Honiara.
On Thursday – after the documents began circulating online – Australian diplomats announced more financial aid would be supplied to the country.
Mr Dutton said he would meet his New Zealand counterpart on Friday and it was “a standing agenda item for all of us to be realistic about China’s footprint, their exertion, their pressure and the way in which they conduct their business”.
Mr Rudd called on Australia’s government to urgently send its foreign minister to the Solomon Islands.
“This is a big change in Australia’s immediate strategic environment, where strategic competition between Australia and China comes right up and close to Australia’s own territorial waters,” he told the ABC.
In February, the US said it planned to open an embassy there amid concerns about China’s plans in the Pacific.