Three American marines have been killed in a horror crash during a military exercise off the coast of the Northern Territory.

The Marine Rotational Force Darwin confirmed three of their personnel had died, while another five were flown to Royal Darwin Hospital in serious condition following an Osprey crash over the Tiwi Islands at 9.43am, Sunday.

He said the aircraft, with 23 personnel on board went down while transporting troops during a routine training exercise, known as Predators Run, near Pickataramoor, Melville Island, 80km north of Darwin.

“Recovery efforts are ongoing,” a MRF spokesman said.

The cause of the incident is under investigation.

A new US Air Force will build a "mission planning" and operations centre in Darwin, as part of $630 million in American spending across the top end over the next two to three years.

The "Squadron Operations Facility" in Darwin will add to its growing array of military assets in the north, raising fears Australia may be locked into any future military conflict between China and the USA.

The tender documents say the Squadron Operations facility in Darwin will be used for maintenance, mission planning, intelligence and crew briefings — it is budgeted to cost $US26 million ($40 million).

“Being able to organise and deploy forces outside of the dense missile attacks that China is likely to use against places like Guam and Okinawa is part of the strategic logic,”

Ten Marine Corps MV-22B Ospreys have arrived in Australia’s Northern Territory as part of a 2,500-strong rotational force, the Marine Corps said Tuesday.

The Ospreys, from Marine Corps Base Hawaii’s Marine Medium Tiltrotor Squadron 363, are deployed to Royal Australian Air Force Base Darwin, according to a Marine Corps statement and information released Friday by the U.S. Department of Defense with photographs of the aircraft.

The tiltrotors, air crew and support personnel make up the air combat element of Marine Rotational Force — Darwin, which began its annual seven-month rotation last month.

The 12th contingent of the rotational force since 2012 will practice expeditionary operations, geographically distributed communications, non-combatant evacuation, embassy reinforcement, humanitarian assistance/disaster relief and rapid projection of combat power

With construction deadline looming, engineering contractor Saunders International has been removed as lead builder for the A$270m US military bulk fuel storage facility at East Arm.

The project was originally scheduled for completion by September 15, but that is now likely to be delayed until later this year.

The announcement comes as workers put the lid on the final tank this week.

The Darwin bulk fuel storage facility represents a $270m investment in the Northern Territory.

Australia needs to have a more honest conversation, with itself and its main ally, about the b-word. As a straight-talking country that prides itself on its closeness to the United States, Australia finds it curiously difficult to talk in plain terms about foreign military basing on its territory, at least in public. It’s an interesting kink in the country’s strategic psyche—and one that needs straightening out sooner rather than later.

As the defence strategic review announcement and AUKUS submarine decision are pending, Canberra should develop clear, plain language that eschews euphemism when talking about the US’s forward posture and associated basing arrangements in Australia.