The space division will be established within the Royal Australian Air Force headquarters in Canberra early next year.

Chief of Air Force Mel Hupfeld said guaranteeing access to the "contested domain" of space was becoming increasingly important.

"However this does not mean that defence encourages the militarisation of space," Air Marshal Hupfeld said on Wednesday.

"All space operations are conducted consistent with international and domestic legal obligations."

Defence will invest $7 billion in space capabilities over the next 10 years.

Shadow treasurer Jim Chalmers confirmed Labor supported the spending.

"Clearly our defence force needs to maintain capability and clearly the definition of capability changes very rapidly when it comes to defence," he told the National Press Club.

"There are new frontiers in defence technology all of the time, and any country like ours investing so heavily in our defence needs to keep up with those developments and ideally get ahead of them.

"If the developments in technology require us to invest in those areas then so be it."

Air Marshal Hupfeld said satellite technologies were used daily to gather information about the weather, navigation and geospatial intelligence.

"Defence is delivering capabilities including space domain awareness, sovereign controlled satellite communications and space-based Earth observation, and navigation," he said.

Air Vice-Marshal Cath Roberts will head the new division.

"To reach for the stars and actually get there is a phenomenal feeling," she said.

"As an aero-space engineer I have always been fascinated by space - the ultimate high-ground."

Australian Associated Press