The need for this entity had become more relevant after the global financial crisis, he said, adding that there is broad agreement on the need to discuss an inclusive regional architecture.

The new body is needed to bring leaders of the region together to enable them to cooperate across the breadth of security, economic and political challenges in the future, PM Rudd said in his keynote address at the 8th Shangri-La Dialogue.

Defence ministers and officials from 27 countries are participating at the premier annual security meet that has been organised by the London-based think-tank, the International Institute for Strategic Studies (IISS).

PM Rudd proposed the APC last year to foster regional cooperation with Asia and he had said he hopes to see it in place by 2020.

The track one-and-a-half forum to explore the possibility of an APC will be held after the East Asia Summit and the Apec meet later this year.

'By ourselves, Australia cannot shape the future of the region we live in,' he explained, adding that he strongly believes that Asia would be the region to watch in the future.

'I do not believe we can afford to sit idly by while the region simply evolves - without any sense of strategic purpose,' he said.

'In fact I believe that is potentially dangerous,' he said, adding that the 'realism of the international relations of the 21st century necessarily involves a high degree of structured regional and global engagement to be effective in our highly globalised world.'

Members of Asean, he pointed out, had grown from strength to strength because of the stability provided by the grouping.

And this was reason to explore a wider regional community.

'The choice is whether we seek actively to shape the future of our wider region - the Asia Pacific region - by building the regional architecture we need for the future, if we are together to shape a common regional future.

'Or whether we will adopt a passive approach - where we simply wait and see what evolves, whether that enhances stability or whether it undermines it.'

Pointing out that there is no single regional organisation with a pan-regional mandate that covers the full policy spectrum, he said the APC could help ensure that the process of regional economic and financial integration keeps moving forward.

He said Mr Richard Woolcott, the Special Envoy on the APC appointed by him had already held discussions in many Asian capitals.

And according to the report presented by him there is 'agreement on the value of a focused discussion' on the issue, he said.

On Saturday, US Secretary of State Robert Gates will address the forum on America's role in the Asia-Pacific.