United States military aircraft, including drones undertaking surveillance operations over the South China Sea, could be based on Australia's Cocos and Keeling Islands in the Indian Ocean.

As part of enhanced US-Australian military co-operation announced in November by Julia Gillard and the US President, Barack Obama, the islands would replace the US's present Indian Ocean base of Diego Garcia, which the US leases from the British and is due to be mothballed in 2016.

Eye in the sky … the Global Hawk can cover a vast expanse of ocean.

The Washington Post reported yesterday that the US was eyeing the Cocos Islands, 2700 kilometres east of Diego Garcia, as ''an ideal site not only for manned US surveillance aircraft but for Global Hawks, an unarmed, high-altitude surveillance drone''.

''Aircraft based in the Cocos would be well positioned to launch spy flights over the South China Sea,'' the Post reported.