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.

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.