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

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.

The frigate contract is the biggest Australian defence purchase since the government agreed to build nuclear-powered submarines with the United States and Britain in 2023. MHI's Mogami frigate was selected over German company Thyssen­Krupp Marine Systems' MEKO A-200 in a meeting of the government's national security committee on Monday.