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 warships for Australia, marking Tokyo's most consequential defence sale since ending a military export ban in 2014 as it steps away from postwar pacifism to counter China.

Billed as Japan's biggest defence export deal since World War II, Australia will pay US$6 billion (Aus$10 billion) over the next 10 years to acquire the fleet of stealth frigates.