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 Mitsubishi Heavy Industries Group announced Tuesday that the Australian government has chosen it to build a new fleet of warships for the nation's navy.