Australia will upgrade its navy with 11 Mogami-class frigates built by Japan's Mitsubishi Heavy Industries, its defence minister Richard Marles said on Tuesday.

"This is clearly the biggest defence-industry agreement that has ever been struck between Japan and Australia," Marles said, touting the US$6 billion deal.

Mitsubishi Heavy Industries was awarded the tender over Germany's ThyssenKrupp Marine Systems.

Australia announced a major restructuring of its military in 2023, turning towards long-range strike capabilities.

Mogami-class warships are advanced stealth frigates equipped with a potent array of weapons.

Marles said they would replace Australia's ageing fleet of Anzac-class vessels, with the first Mogami-class ship to be in service by 2030.

"The Mogami-class frigate is the best frigate for Australia," said Marles.

"It is a next-generation vessel. It is stealthy. It has 32 vertical launch cells capable of launching long-range missiles."

Defence industry minister Pat Conroy said the frigates were capable of launching long-range Tomahawk cruise missiles.

"The acquisition of these stealth frigates will make our navy a bigger navy, and a more lethal navy," he said.

Australia announced plans in 2021 to acquire US-designed nuclear-powered submarines, scrapping a years-long plan to develop non-nuclear subs from France. (AFP)