Hackers have stolen sensitive information about the Australia's F-35 stealth fighter and P-8 surveillance aircraft programmes.
A defense subcontractor was hacked using a tool widely used by Chinese cybercriminals.
The 50-person aerospace engineering company in question was compromised in July last year but notified the national cybersecurity agency Australian Signals Directorate (ASD) in November.
Some 30GB of "sensitive data" subjected to restricted access under the US government's International Traffic in Arms Regulations rules were stolen, Michel Clarke of ASD said.
Clarke has worked on the case, but did not name the subcontractor, reported that the information about the F-35, the US' latest generation of fighter jets, as well as the P8, an advanced submarine hunter and surveillance craft, were stolen.
Hackers have used a tool called China Chopper, which according to cybersecurity experts is widely used by Chinese cybercriminals. Hackers have been accessed via a via an internet-facing server.
The subcontractor also used internet-facing services that still had their default passwords "admin" and "guest" in other parts of the network.
Experts have dubbed nicknamed the hacker Alf after a character on the popular Australian soap "Home and Away", Clarke said, and the three-month period where no one knew about the breach they dubbed "Alf's Mystery Happy Fun Time".
"The information they have breached is commercial," Defence Industry Minister Christopher Pyne said.
"It is not classified and it is not dangerous in terms of the military," he added.
Pyne added that Australia is increasingly being attacked by cybercriminals, as it as it was undertaking a massive Aus$50 billion submarine project which he believes to be the world's largest.
In addition, Australia has decided to buy 72 F-35A aircraft for Aus$17 billion.
Pyne declined to comment on who might be behind the hacker attack but just pointed out that the government was spending billions of dollars on cybersecurity.
Western governments have long accused Chinese hackers of stealing industrial, corporate and military secrets.
At the end of May, an Israeli cybersecurity expert revealed that the F-35 fighter jet is vulnerable to hacking attacks, but hackers apparently knew this as early as last year.