Buenos Aires will acquire military hardware including fighter aircraft, anti-aircraft weapons and specialised radar, as well as beefing up its special forces.
The news comes months before drilling for oil begins in earnest off the Falkland Islands, provoking Argentina’s struggling President Cristina Fernandez de Kirchner.
Last month she created a new cabinet post of Secretary for the Malvinas, her country’s name for the Falklands.
Meanwhile, Defence Secretary Philip Hammond has refused to confirm that Britain would retake the Falklands if they were overrun by enemy forces.
The extra cash means Argentina will increase defence spending by 33.4 per cent this year, the biggest rise in its history. It will include £750million for 32 procurement and modernisation programmes.
They will include medium tanks and transport aircraft and the refurbishment of warships and submarines. The shopping list also includes Israeli air defence systems, naval assault craft, rocket systems, helicopters and a drone project.
There will be a range of hi-tech capabilities for the army and the formation of new commando and special forces units.
In August last year the Sunday Express revealed details of a contract to buy 20 French Mirage fighter jets from Spain, giving Argentina the ability to attack Port Stanley airfield with laser guided bombs.