Japan clinched a landmark A$10 billion ($6.5 billion) deal on Tuesday to build Australia's next-generation warships, marking Tokyo's most consequential defence sale since ending a military export ban in 2014 in a step away from its postwar pacifism.

Australia says it has accepted a Japanese company's bid for a lucrative and hotly contested contract to build Australian naval vessels, expected to be worth 10 billion Australian dollars ($6.5 billion).

Australia selected Japan’s Mitsubishi Heavy Industries for a multi-billion dollar deal to build a fleet of advanced naval frigates, boosting Tokyo’s ambitions to become a major exporter of military equipment and develop its defense sector.