Major resources and infrastructure projects will have to give fair consideration to Australian suppliers under new laws Labor will put to parliament.
The government says this will be worth $1.6 billion a year in extra work to local firms.
Prime Minister Julia Gillard announced the measure on Sunday when she released the government's industry and innovation statement.
The government says local industry has been concerned that major project developers have been importing materials and equipment rather than exploring what is available in Australia.
An Australian Jobs Act will give legislative requirements for the use of local suppliers and materials for the first time.
Under the proposed laws, projects worth $500 million or more will have to develop Australian industry participation plans that set out how the developer will give local suppliers a fair chance to win work.
Projects worth more than $2 billion will also have to set up an office of Australian industry capability in their procurement headquarters.
Under its plan for Australian jobs - a response to last year's manufacturing taskforce and economic and future jobs forums - Labor also aims to support industry to win new business overseas and help small- and medium-sized businesses grow.
It plans to establish 10 innovation precincts around the country by 2014, starting with a manufacturing one based in southeast Melbourne and Adelaide.
The precincts are designed to bring industry, research institutions, technology experts and government agencies to the same area so they can collaborate on new business opportunities.
The government hopes the networks will help more Australian firms to be able to compete globally.
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