Australia could one day allow U.S. spy flights to operate from a remote Indian Ocean island, Defence Minister Stephen Smith confirmed on Wednesday, supporting the U.S. pivot to Asia but likely upsetting Australia's biggest trading partner, China.

Smith said the possible use of Australia's remote Cocos Islands territory had been raised with the United States, but the proposal was not under active consideration and was not among current plans for Canberra to strengthen military ties with Washington.

"We view Cocos as being potentially a long term strategic location. But that is down the track," Smith told reporters on Wednesday.

The Washington Post said the Pentagon was interested in using Cocos Islands, a series of atolls about 3,000 km (1,800 miles) west of Australia and south of Indonesia, as a new base for surveillance aircraft and allowing spy flights over the South China Sea.

China, the Philippines, Malaysia, Brunei, Vietnam and Taiwan all claim territory in the South China Sea.

Cocos Islands could be an alternative to a U.S. base on the British territory of Diego Garcia in the Indian Ocean, which faces an uncertain future beyond its current lease which expires in 2016, the Washington Post said.

Australia is a firm U.S. ally but counts China as its biggest trading partner and is careful not to antagonize it.

In November, U.S. President Barack Obama outlined his pivot to Asia and agreement with Canberra for a de-facto base for 2,500 marines near the northern city of Darwin.

Australia and the U.S. also agreed to allow greater U.S. air force access to northern Australian bases, and to give the U.S. navy greater access to the Indian Ocean naval base in Perth.

Smith said Australia had been open with China about its plans, and its posture review which is likely to recommend more military assets move to the country's north to protect resource projects.

'A bit worrying'

The Washington Post, quoting U.S. and Australian officials, said the Cocos Islands, within flying range of both Southeast Asia and South Asia, could be ideal for not only manned U.S. surveillance aircraft but for Global Hawks, an unarmed, high-altitude surveillance drone.

The U.S. Navy is developing a newer version of the Global Hawk, known as the Broad Area Maritime Surveillance drone, or BAMS, that is scheduled to become operational in 2015.

Smith played down chances of a U.S. base on Cocos Islands, and said while Australia hosted joint facilities and visiting U.S. forces, it had never allow the United States to operate an independent base in Australia.

He said Cocos Island was not one of the government's priorities with its stronger military cooperation with the United States.

"We regard an enhanced presence by the U.S. in the Asia Pacific region as a force for peace, as a force for stability and a force for prosperity," he said.

Strategic analyst Hugh White, head of defense and strategic studies at the Australian National University, said Australia risked being caught up in a dispute between its strongest military ally and its biggest trading partner.

"All of this relates to the U.S. pivot to Asia. The U.S. pivot to Asia is all about the rise of China," White told Australian radio, adding it would be a mistake if Australia joined any U.S. push to try to contain China.

"It means that Australia is for the first time really since the end of the Vietnam war, starting to be seen by the United States as a strategic asset in its strategic competition with China.

"That is, of course, a bit worrying for Australia, because China is our biggest trading partner. Our future is going to be one where we are increasingly pulled between our old ally and in the United States and our economic future in Asia."