The Morrison government will invest A$500 million to help island countries in the Pacific region invest in renewable energy.
The Australian government hopes this will help Pacific island countries strengthen their ability to cope with climate change and natural disasters.
Leaders of Pacific island countries have also called on Australia to take more steps to help them cope with climate change.
Prime Minister Morrison announced the grant before attending the Pacific Islands Forum in Tuvalu on Wednesday.
Prime Minister Morrison said the funds will be allocated from the existing Australian aid fund.
The Australian Government will allocate funds to Pacific island countries for a five-year period from next year to address environmental climate change.