The ministry has requested an annual budget of $31.3 billion for 2012 -- a 6.6 percent increase from this year's $29.4 billion, the Yonhap news agency reported.
Of the $31.3 billion, the Defense Ministry wants $4.02 billion to strengthen its presence in the western islands with the latest weapons and base facilities.
Better shelters, housing and military buildings have been a sensitive issue for the army since November when North Korea unexpectedly shelled South Korea's Yeonpyeong Island in the Yellow Sea several miles from the North's mainland.
Dozens of houses and several military buildings were damaged in the attack that killed two South Korean marines and two civilians and injured at least 20 others. South Korean forces returned fire but there were no known causalities in the North.
Also for next year's budget, the military allocated $3.18 billion to aid policy decisions as part of defense reform plans and another $3.28 billion to improve the welfare of troops.
"Our request was largely focused on building a military that's ready for battle and can win immediately," the Ministry of Defense said. "We will also try to improve the welfare of our troops and boost their morale and to keep pushing for defense reform."
Around $1.78 billion has been allocated for South Korean troops taking over duties transferred from U.S troops in the run-up to 2015 when South Korea will take over wartime operational control of its troops from the United States. Since the end of the Korean War in 1953, the United States has maintained wartime command of South Korean troops.
"To prepare for the transfer of the wartime control, we will strengthen the command and control structure," the ministry said. "We will also help with the construction of the war-game center."
Seoul regained peacetime control of its military in 1994. But around 28,500 U.S. troops remain in South Korea as a deterrent against attacks by North Korea, which regularly disputes territory that was divided in the armistice.
Last month the South Korean navy officially deployed its second Aegis destroyer, Yulgok Yi I, into service after the successful completion of nine months of sea trials.
The 8,500-ton Yulgok Yi I -- named after one of Korea's most prominent Confucian scholars in the 16th century -- is part of the government's Korean Destroyer experimental program, KDX. The vessel is sailing with South Korea's 7th Fleet.
South Korea signed the contract for the ship with Daewoo Shipbuilding and Marine Engineering in June 2006. The vessel was delivered last August at DSME's main Okpo Shipyard on Geojedo Island off the southern tip of the peninsula.
In March, South Korea said it aims to purchase a number of drones and stealth fighters starting around 2015 as part of the delayed acquisition F-X program.
"We will acquire high-altitude unmanned reconnaissance planes to boost our surveillance capability against the enemy," Defense Minister Kim Kwan-jin said. "Last year we endured North Korea's grave provocations. ... Now is the time to act boldly and wisely to make our military strong enough in the face of pending security threats."
But a contract for buying Northrop Grumman RQ-4 Global Hawks, an unmanned surveillance vehicle, could be signed much sooner, a South Korean military source told Yonhap news agency.