Malcolm Turnbull has witnessed Australian-trained Filipino troops being put through their paces in urban warfare military drills.
Eighty Australian Army personnel have mentored the first batch of 170 soldiers in a three-week training course.
The students are fresh from quashing an Islamic State insurgency at Marawi city in the country's south.
The focus has been on teaching jungle fighters to handle urban combat and avoid casualties, clear buildings, detect and destroy improvised explosive devices and render first aid.
The Australian trainers had honed their skills over 15 years serving in Iraq and Afghanistan.
In December a second group will undertake the course.
The prime minister received the full military bells and whistles treatment including a 21-gun salute.
He inspected an honour guard of Marines, Army, Navy and Air Force personnel and military brass band as he arrived at Camp Aguinaldo in Manila.
The Philippines defence force top brass gave him a briefing on the situation in Marawi.
Australia had previously provided surveillance aircraft to the operations.
Mr Turnbull watched on enthralled as the Filipino and Australian soldiers demonstrated a scenario of troops coming under sniper engagement, clearing houses, sustaining casualties as well as destroying bombs.
Australian Corporal James Cunningham, who has served in Afghanistan twice, played the Islamic State target who had to fall to the ground and play dead.
He later joked with Mr Turnbull that it was an Oscar-winning performance.
Mr Turnbull insists Marawi should not be allowed to become the Raqqa or Mosul of Southeast Asia - a reference to the fallen IS strongholds in Syria and Iraq.
"Australians, Filipinos you're on the frontline thank you for your service, our freedom depends on your courage," Mr Turnbull said.
Earlier on Monday afternoon, Mr Turnbull visited a warehouse where Australian humanitarian aid supplies such as mosquito nets, rice, toys are stored en route to Filipinos displaced in the Marawi conflict which has raged since May.
"We've been very pleased to help the Philippines win the war against terrorism... and now we're helping them win the peace," Mr Turnbull said.
Mr Turnbull and Philippines President Rodrigo Duterte pledged greater intelligence sharing and emphasised the need to combat extremist propaganda on the internet net during a bilateral meeting on Sunday night.
The prime minister is in town for the East Asia leaders summit.