Dubbed the Main Ground Combat System (MGCS), the tank project sits alongside a planned future jet fighter as part of pivotal military cooperation between the two neighbours.

The deal announced Tuesday includes a so-called "framework agreement" laying out how the project will be organised, as well as an "implementing arrangement" setting out the specifications for the new fighting vehicle.

Both agreements were signed by French Defence Minister Florence Parly and her German counterpart Annegret Kramp-Karrenbauer, the German Defence Ministry said in a statement.

"With this project, Germany and France are sending an important signal for European cooperation in defence policy," the ministry said.

The project will be led by Germany, with Berlin and Paris each bearing half of the costs.

It is "intended to replace the German Leopard 2 tanks and the French Leclerc tanks from the mid-2030s," according to the ministry.

France and Germany in February gave the green light for building a prototype of Europe's next-generation fighter jet, effectively launching a project long held up by disputes over how the industrial work would be divided.

The 150-million-euro ($162-million) contract, financed equally by both countries, aims to create prototypes of the stealth delta-wing jet as well as integrated drones and network infrastructure of the new system by 2026.