Washington estimates it will spend some 545 million dollars on the high-tech defense project between the 2006 and 2011 fiscal years and has requested Japan make an equal contribution, the Yomiuri Shimbun newspaper said without specifying sources.

But, the Yomiuri said, Japan planned to negotiate with the United States for a significant cut in the cost as Tokyo has been trying to slash defense spending amid mixed signals on the direction of the economy.

The defense agency would not confirm the report but said talks were ongoing.

"Japanese and US authorities are now in the work of determining cost sharing and other points as the project moves from joint research to a development phase, but nothing has been decided yet," an agency spokesman said.

"We would like to withhold comment on further details," he added.

Japan's spending on joint research on missile defense with the United States totals 26.2 billion yen (240 million dollars) for the seven years to March 2006.

Japan has been in a hurry to build up a missile defense system with the United States since North Korea stunned the world in 1998 by firing a missile over the Japanese mainland into the Pacific.

The communist state is now locked in a standoff over its aspirations to be a nuclear power.

Japan has been officially pacifist since World War II and is under the security umbrella of the United States, which stations some 40,500 troops in the country.

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