Foreign Minister Marise Payne and Alex Hawke, the Minister for International Development and the Pacific, announced that Dennis Richardson, former head of the Australian Security Intelligence Organization (ASIO), will lead a review of international development policy priorities.
They said the new policy would "guide our support for a secure, stable, prosperous and resilient Indo-Pacific."
Australia's aid budget has been cut by 27 percent to four billion Australian dollars (2.73 billion U.S. dollars) since the Coalition was elected to govern in 2013.
"The new policy will reflect Australian values, including our commitment to human dignity, gender equality and inclusive development, and our commitment to poverty reduction and helping those impacted by natural and man-made disasters," Payne said.
Submissions to the inquiry began on Tuesday.
According to an analysis by the Lowy Institute, a leading think tank, Australia's foreign aid budget will be among the lowest of the 32 countries in the Organization for Economic Cooperation and Development (OECD) by 2020-21.