The "OneSky" system will replace Australia's current civilian system which dates from the late 1990s and was also developed by Thales, the government said.
"This programme will make Australia the first country in the world to commission an integrated joint civil-military air traffic management system," Defence Minister Kevin Andrews said.
The combined system will see controllers share flight data and allow for a "seamless flow of national and international air traffic", he added in a statement.
The jet went missing en route from Kuala Lumpur to Beijing with 239 people on board, with a massive air and underwater search failing to find any evidence of the plane.
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"This technology... Will help us to have better surveillance of aircraft and so we would know about an incident like MH370 more quickly and more precisely," Truss told reporters at the Australian International Airshow at Avalon in Victoria.
The government did not reveal the size of the contract with Thales, but The Australian newspaper estimated implementation costs to be about Aus$600 million (US$470 million).
AirServices Australia and the Department of Defence will work with Thales to implement the system, which will be phased in from 2018 to 2021.
"It will place us in a position to manage forecast growth of air traffic movement in Australia, of as much as 60 percent by 2030, minimising delays for the travelling public," Truss said in an earlier statement.
The "OneSky" project was first announced by the previous Labor administration. Local media has reported previous tensions between the defence department and AirServices Australia over merging air traffic control systems.