Visiting Australian Defence Minister Kevin Andrews also called for deeper defence ties with "key strategic partner" India and pitched for a quadrilateral naval exercise with Japan and the US as was done in 2007.
Concerned that "tensions in the Indo-Pacific persist, and in some cases are becoming more acute", Andrews said Australia recognises India's "critical role" in supporting the security, stability and prosperity of the Indian Ocean region.
"Australia strongly opposes the use of intimidation, aggression or coercion to advance any country's claims or to unilaterally alter the status quo. We are particularly concerned about the possible militarisation of features in the South China Sea," he said, delivering a lecture at Defence Ministry-run think tank IDSA.
Taking an apparent dig at China, he said turning a reef into a military airport is not in anyway enhancing the security and peace of that region.
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South China Sea, a disputed area with China and several countries in the region including Vietnam and the Philippines staking territorial claims, is witnessing military tensions amid increasing Chinese assertiveness.
Noting that both India and Australia border the Indian Ocean, he said they have a shared interest in the maintenance of freedom of navigation and trade.
"This is why Australia views India as a key strategic partner - and there is scope for us to cooperate further on broader global issues," he said.
Asked if he would be in favour of a quadrilateral naval exercise as was done in 2007, he said, "If indeed quadrilateral opportunities arise in the future, we would be having an inclination to be part of those exercises".