Australia's military has received initial budgetary approval for a program to develop its own capabilities to counter improvised explosive devices.

Minister for Defense David Johnston said First Pass approval of the LAND 154 Phase 2 Joint Counter Improvised Explosive Device program includes about $17 million for capability development, trials, risk reduction activities and industry solicitation.

"Improvised Explosive Device have emerged as the weapon-of-choice against Australian forces deployed in both Iraq and Afghanistan, and the effectiveness of IEDs has more recently been demonstrated in Mali and Syria," Johnstone said in the announcement.

"The use of IEDs continues to increase globally and they are being employed by an expanding range of groups, including insurgents, terrorists and by conventional and unconventional military forces."

Senator Johnston said LAND 154 Phase 2 will be the next major step in the development of an Australian Counter IED capability.

Activities to be explored following First Pass approval and before Second Pass approval are a deployable intelligence facility to allow Australian forces to respond to regional or local IED blast events and begin evidence analysis, development of a vehicle-mounted IED detection systems and counter-IED system.

A Second Pass decision for full development is anticipated to be made in 2016 or 2017, the department said.

The two-pass system for all government projects was instituted in 2008 to support capital budgeting decisions.