The lunar rover will be designed to collect soil from the moon's surface, which will then be processed to extract oxygen.
AROSE is working on the Lunar Service Rover feasibility study for the Australian Space Agency and NASA, as part of the $50 million Trailblazer program.
AROSE CEO Leanne Cunnold said Australia's expertise in remote operations had led to significant advancements in the resources, energy, medical and engineering sectors among others.
"Our world-leading technical expertise is now taking us on a journey to space, which is incredibly exciting and those findings will also benefit industry here on Earth, much like NASA's original space missions did so many decades ago," she said.
As part of pre-Budget commitments the government has pledged $6.5 million in total for WA's fledgling space program, with $2.5 million also going to Curtin University's Binar space program.
Curtin launched its first spacecraft, Binar-1, in August 2021, which is orbiting 400km above Earth.
Six more CubeSat spacecraft will be sent into space over the next 18 months, to form WA's first satellite constellation.
Science minister Roger Cook said space was just one of the many exciting industries taking off in WA.
"This announcement is not just a boost in funding but a boost in confidence about WA's role in the global space sector," he said.
"Both AROSE and Curtin University's Binar space program have truly reignited WA's passion for space and this funding will ensure both programs can continue the important work that they do well into the future."
