Defence Minister Robert Hill said the installation of Raytheon's SM-2 missiles on the frigates Darwin, Melbourne, Newcastle and Sydney will be complete by early 2009.

"The upgrade will significantly extend the range of the area air defence region and provide greater potential for target intercept and destruction, a major capability boost for the Navy and a great asset for potential coalition operations," he said.

Hill said the missile system had an improved range to more than 50 nautical miles and enhanced performance against modern anti-ship missiles and aircraft.

He said the missiles would be installed in Australia.

Australia, which joined the US-led invasion of Iraq last year and remains a staunch US ally, has embarked on a spending spree for US military hardware over the past 12 months, saying it wants its defence forces to have "inter-operability" with their American counterparts.

Canberra has committed up to 16 billion dollars on the US-developed joint strike fighter, it has also ordered 59 second-hand US Abrams tanks and will spend US six billion dollars on Aegis guided missile systems.

Last week, Australia also signed up for the controversial US "Son of Star Wars" missile defence shield.

WAR.WIRE