Thales Australia, which built the Huon class, is set to deliver and support the mine countermeasures (MCM).
The Head of Navy Capability, Rear Admiral Jonathan Mead said the project will ensure Australia's Defence is able to provide an effective MCM capability out to the 2030s.
"Minehunters play a vital role in protecting Australia’s ships, harbours and infrastructure from the threat of sea mines," RADM Mead said.
"First Pass approval is a major milestone for this project that will see the life of the Minehunters extended to ensure there is no gap in mine warfare capability as we determine the replacement vessels."
Defence said Australia's defence industry will be heavily involved in the future of the platforms with negotiations currently underway with Thales Australia to engage them as the prime systems integrator to deliver the project.
The extended life of the vessels and the need for new technologies was alluded to in the 2016 Defence White Paper
"The mine countermeasures and military hydrography capability will be updated to support the future force," the paper said.
"New technologies are developed to counter the threat of maritime mines. Defence will seek to replace the hydrographic capability with an efficient combination of military and commercial hydrographic and oceanographic survey capabilities."
Originally designed in Italy as the Gaeta Class for the Italian Navy, the RAN Huon Class has been modified to suit Australian conditions, including improved accommodation and mine hunting capabilities.
The Huon Class were introduced into service in the early 2000s.